ATRIUM REAL ESTATE INVESTMENT TRUSTir2.chartnexus.com/atriumreit/docs/annual/10.pdf · 2019. 6....

Annual Report2015

ATRIU

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ATRIUM REAL ESTATE INVESTMENT TRUST

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2. OUR MISSION3. PROFILE OF ATRIUM REAL ESTATE INVESTMENT TRUST4. FINANCIAL HIGHLIGHTS8. SALIENT FEATURES OF THE FUND9. CHAIRMAN’S STATEMENT11. PROPERTY PORTFOLIO15. STRUCTURE OF ATRIUM REAL ESTATE INVESTMENT TRUST16. PERFORMANCE DATA18. BOARD OF DIRECTORS AND MANAGEMENT/ CORPORATE DIRECTORY19. PROFILE OF DIRECTORS20. PROFILE OF CHIEF EXECUTIVE OFFICER21. STATEMENT OF CORPORATE GOVERNANCE26. STATEMENT OF INTERNAL CONTROL28. FINANCIAL STATEMENTS

• MANAGER’SREPORT• STATEMENTBYDIRECTORSOFTHEMANAGER• STATUTORYDECLARATION• TRUSTEE’SREPORT• INDEPENDENTAUDITORS’REPORT• STATEMENTOFFINANCIALPOSITION• STATEMENTOFPROFITORLOSSANDOTHERCOMPREHENSIVEINCOME• STATEMENTOFCHANGESINNETASSETVALUE• STATEMENTOFCASHFLOWS• NOTESTOTHEFINANCIALSTATEMENTS• SUPPLEMENTARYINFORMATIONONREALISEDANDUNREALISED

UNDISTRIBUTEDINCOME74. ANALYSIS OF UNITHOLDINGS76. NOTICE OF THE FOURTH ANNUAL GENERAL MEETING

Contents


2

OurMissionTo maximise income in order to reward unitholders with

a competitive rate of return for their investments through

regular and stable distributions and achieving long-term

growth in distributions and Net Asset Value per unit.

Annual Report 2015

3Profile of Atrium Real Estate Investment Trust

Atrium REIT is an industrial asset focused real estateinvestmenttrustconstitutedbyaTrustDeedenteredintoon20November2006andamendedbytheSupplementaryDeeddated25November2008betweenCIMBCommerceTrusteeBerhadastheTrusteeandAtriumREITManagersSdnBhdastheManager.AtriumREITwaslistedonMainBoardofBursaMalaysiaSecuritiesBerhadon2April2007

AtriumREIT’spropertyportfolioconsistsoffour industrialproperties located in prime locations in theKlangValley,namely,AtriumShahAlam1,AtriumShahAlam2,AtriumPuchongandAtriumUSJ.


4 Financial Highlights

1. Based on closing market price on 31 December 2015

7.50%1

8.25sen

Gross Dividend Yield per annum Distribution Per Unit per annum

1.64%RM

1.41Management Expense Ratio Net Asset Value per unit

65.23% 24.96%

Occupancy Gearing level

YEAR

DISTRIBUTION PER UNIT

2011 2012 2013 2014 20158.00

8.10

8.20

8.30

8.40

8.70

8.50

8.80

8.60

8.90

SEN

2,000

0

4,000

6,000

8,000

10,000

12,500

14,000

16,000

YEAR

NET PROPERTY INCOME

2011 2012 2013 2014 2015

RM’0

00

TotalIncome NetIncome

TOTAL INCOME AND REALISED NET INCOME

2011

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2012 2013 2014 2015

RM’0

00

YEAR

Annual Report 2015

5Financial Highlights

14,59814,689

10,933

14,286

8.53

8.80 8.80

8.40

8.25

20,019

10,399

28,404

10,789

28,684

21,096

10,813 11,134

19,271

10,323

12,765

NET ASSET VALUE AND MARKET PRICE PER UNIT

0.2

0.4

0.6

0.8

1.0

1.2

1.4

RM

NetAssetValueasat31December MarketPriceasat31December

YEAR

1.6

2011 2012 2013 2014 2015

YEAR

PROPERTIES IN PORTFOLIO

2011 2012 2013 2014 20150

1

2

5

3

6

4

NUM

BER

5 5 5 5

4

1.10 1.071.22

1.29 1.331.41

1.30

1.10

1.37

1.19


6 Financial Highlights

8.2

8

8.4

8.6

8.8

9.0

9.2

YEAR

EARNINGS PER UNIT (Realised)

2011 2012 2013 2014 2015

SEN

8.868.88

9.14

8.478.54

VolumeUnitPrice

UNIT PRICE VS VOLUME

Jan-15Feb-15Mar-15Apr-15May-15Jun-15Jul-15Aug-15Sep-15Oct-15Nov-15Dec-15

Volume (‘000)Price (RM)

Annual Report 2015

7Financial Highlights

Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

1.30

1.25

1.20

1.15

1.10

1.05

1.00

0.95

0.90

1,900

1,850

1,800

1,750

1,700

1,650

1,600

1,550

1,500

FBM KLCI

AtriumREIT’sUnitPrice FBMKLCI

Price (RM)

ATRIUM REIT’S UNIT PRICE VS FBM KLCI

2015 2014 2013 2012 2011

Asset Under Management (RM’000) 221,900 226,200 221,700 208,100 194,700Total Borrowings (RM’000) 59,600 65,000 65,000 65,000 65,000Total Unitholders Funds (RM’000) 173,272 168,505 164,401 150,706 137,151Market Capitalisation2 (RM’000) 133,981 144,943 158,341 157,123 130,327Unit Price2 (RM) 1.10 1.19 1.30 1.29 1.07Units in Circulation (‘000) 121,801 121,801 121,801 121,801 121,801

2. Based on respective closing prices on 31 December

1.30

1.25

1.20

1.15

1.10

1.05

1.00

0.95

0.90

500

450

400

350

300

250

200

150

100

50

0


8 Salient Features of the Fund

Name of fund : AtriumREIT

Fund category : RealEstate

Fund type : Growthandincome

Investment objectives : To maximise income in order to reward unitholders with annual stabledistributionsofincomeandtoacquirequalityassetstoachievelong-termgrowthintheNetAssetValueperunitoftheFund

Fund investment strategy : AimtoachievetheprimaryobjectivesoftheFundbyimplementinginvestmentandgrowthstrategiessuchasorganicgrowthstrategies,acquisitionstrategiesandfinancingstrategies.

Term of the Trust : Atrium REIT will continue its operation until such time as determined by theTrusteeandtheManagerasprovidedundertheprovisionofClause19oftheTrustDeeddated20November2006.

Approved size of Fund : 121,801,000units

Authorised investments :- Investinrealestates,single-purposecompanies,realestate-relatedassets,non-realestate-relatedassetsandliquidassets

- Atleast50%ofthetotalassetvalueofAtriumREITmustbeinvestedinrealestateassetsand/orsingle-purposecompaniesatalltimes;and

- Investmentinnon-realestate-relatedassetsand/orcash,depositsandmoneymarketinstrumentsmustnotexceed25%ofAtriumREIT’stotalassetvalue.

Financial year end : 31December

Distribution policy : Atleast90%ofthedistributableincomeofAtriumREITshallbedistributedsemi-annuallyoratsuchotherintervalsasdeterminedbytheManagerinitsabsolutediscretion;inarrears.

Borrowing limitations : Up to 50%of the total asset value of the Fund at the time the borrowing isincurred.

Revaluation policy : Therealestatesshallberevaluedat leastonceevery(3)yearsfromthedateof the last valuation (or such other times as required under the SecuritiesCommissionGuidelinesonREITs),oratanytimewheretheTrustee,theManageror the independentauditorappointedbyAtriumREITreasonablybelieves thattherehasbeenasignificantchangeinthevalueofrealestates.

Redemption policy : UnitholdershavenorighttorequesttheFundtorepurchasetheirunitswhiletheunitsarelisted.

Minimum initial investment : Minimumof100units

Minimum additional investments : Multiplesof100units

Investor profile : Suitableforinvestorswhounderstandtherisksrelatedtotherealestateindustryand expect to benefit from the periodic distribution of incomeand long termgrowthoftheFund.

Board lot : 100unitsperboardlot

Quotation : MainBoardofBursaMalaysiaSecuritiesBerhad

Bursa Malaysia Stock Number : ATRIUM5130

Annual Report 2015

9Chairman’s Statement

Overview

For the FY2015, Atrium REIT completedthedisposalofAtriumRawangforacashconsideration of RM13.50 million.AtriumREIT’sportfolioasat31December2015comprisedfourpropertieswithatotalnetlettable area of approximately 903,748squarefeet.Asaresultofthenon-renewalof the expired tenancy for Atrium ShahAlam 2 and the partial void in AtriumPuchong, portfolio occupancy dropped to65.23% (2014:78.25%). The Managertook the opportunity of the vacancy inAtriumShahAlam2tocarryoutanAssetEnhancementInitiatives(“AEI”),thedetailsofwhicharedisclosedhereinthisChairmanStatementand theManager’sReportanddidnot immediately secureanew tenantfor the said property. However, as at thedateofthisreport,IampleasedtoinformtheunitholdersthattheManagerhassincesecured a new tenant and pending theexecution of the tenancy agreement, thetenancy is targeted to commence in thesecondquarterof2016.

Notwithstanding the above, a total ofapproximately505,905sqftofspacewasextended/rented/renewed during FY2015with positive rental reversion which isexpectedtohaveapositiveimpactontheTrust’sportfolioincome.

In compliance to Clause 10.03 of theSecurities Commission’s Guidelineson REITs and the Malaysian FinancialReportingStandard140,arevaluationwascarriedoutby theTruston itsportfolioofproperties at the close of FY2015. First

Pacific Valuers Property Consultants SdnBhd, an independent registered valuerappointed to carry out this revaluationexercise, has adopted a combination ofvaluation methods in their assessmentsandanetfairvaluegainonrevaluationofRM4.29 million has been duly reflectedin the financial statements, giving a totalvalue of asset under management ofRM221.90million.

Distribution per unit (“DPU”) for FY2015decreasedto8.25senperunitasaresultof the temporary rental void in AtriumShah Alam 2 and partial void in AtriumPuchongeventhoughtherewasacapitaldistribution from the one-off gain on thedisposalofAtriumRawang.ThedecreasewasfurthercompoundedbyanincreaseinthepropertyandTrustexpenses.Thetotalassets decreased to RM238.80 millionwhilethegearinglevelreducedto24.96%asat31December2015,whichprovidessignificant debt headroom for futureacquisitions.

Financial Performance

Atrium REIT registered gross revenue ofRM12.87millionandnetpropertyincomeofRM10.93millionforFY2015,adecreasefromRM16.15millionandRM14.29millionrespectively, from the last financial yearended31December2014(“FY2014”).

However,theTrust’snetincomebeforetaxincreasedtoRM15.58millioninFY2015ascomparedtoRM14.82millionforFY2014,as a result of a one off gain on disposalof Atrium Rawang, and an increase in

other income during the current financialyear even though the Trust’s expensesincreased substantially during the year.The increase in Trust’s expenses is duemainly to the real estateagents’ fees forlease/rentalofAtriumShahAlam1,AtriumPuchonganddisposalofAtriumRawang.

As at 31 December 2015,Atrium REIT’sNAV increased to RM173.27 million,representingamarginalincreaseof2.83%y-o-y as a result of the fair value gainon revaluation of the Trust’s investmentproperties.

Distribution to Unitholders

Atrium REIT has consistently strived todeliversustainableandstabledistributableincome since its listing in 2007. TheBoard of Directors of the Manager hasdeclared a final income distributionof 1.30 sen per unit in respect of thefourth quarter of FY2015, which shall bepayable on 29 February 2016. The finalincome distribution, coupled with theaggregate interim income distributionsduring the financial year of 6.95 senperunit,representsatotaldistributionperunit(“DPU”)of8.25senforFY2015(FY2014:8.40sen).ThedistributionyieldforFY2015is 7.50% based on the Atrium REIT’sclosing market price of RM1.10 per unitasat31December2015(FY2014:7.06%distribution yield at closing market priceof RM1.19 per unit as at 31 December2014).

Dear Unitholders,On behalf of the Board of Directors of Atrium REIT Managers Sdn Bhd (“Manager”), once again I derive great pleasure of presenting to you the Annual Report of the Atrium Real Estate Investment Trust (“Atrium REIT” or “Trust”) for the financial year ended 31 December 2015 (“FY2015”).


10 Chairman’s Statement

Operations Review

During the financial year, the Managersuccessfully renewed the tenancy forAtrium USJ-Block B, rented out part ofAtrium Puchong whilst the tenancy forAtrium Shah Alam 1 was extended byreplacing DHL Properties (Malaysia)Sdn Bhd with a new tenant, MarelliAsiaPacificSdnBhd.AtriumREITexperiencednet positive rental reversions for allthe tenancies renewed in FY2015, anindicationofthequalityofthetenantsandthepropertiesownedbytheTrust.

TheManagerundertookanAEIforAtriumShah Alam 1 involving the replacementof one new passenger lift, changing ofthe whole warehouse lighting system,upgradingofthepowersupply,installationof additional translucent sheets aroundthe perimeter of the warehouse building,external wall and facade repainting andupgrading of the toilets in the officebuilding. The AEI is expected to becompleted in the first quarter of2016atanestimatedcostofapproximatelyRM3.0million,excludingGoodsandServicesTax.

The Manager also took the opportunityto carry out anAEI atAtrium ShahAlam2 when the previous tenant, CEVALogistics (Malaysia) Sdn Bhd moved outof the premises. TheAEI involves mainlythe upgrading and refurbishment of thewhole warehouse floor slab and roof,replacement of the warehouse lightingsystem, replacement of the rain watergoods,externalwallandfacaderepaintingas well as sheet piling works at therear boundary of the property. The AEIcommenced in the first quarter of 2016and is expected to be fully completedby the third quarter of 2016 at a totalcontract sum of approximately RM15.4million,excludingGoodsandServicesTax.

During the fourth quarter, a tenant wassecured to partially rentAtrium Puchong,albeitonashorttermbasis.TheManagerwill continue to work closely with realestate agents, existing tenants and thePromoter of Atrium REIT to take up thebalancespaceandalsotheexistingrentedout space upon expiry of the short termtenancy.2016 Outlook

Going forward, global growth is expectedto continue to weaken, led by China’sslowdownandtheresultingcrudeoilglutanddepressedoilandcommoditiesprices.Crude oil prices climbed slightly as Irancautiously supportedaproposalbySaudiArabia and Russia to freeze productionat near-record levels. In Asia, growth inoil rich emerging countries are expectedtoberestrainedbythecrudeoilsituationfueled by China’s slowing economy andthe fluctuating yuan despite domesticdemandsremainingreasonablyhealthy.

While downside risks to growth remain,the Malaysian economy is expected toexpandwithintheregionof4.0%to5.0%in 2016. Domestic demand will continueto be the main driver of growth forMalaysia,supportedmainlybytheprivatesector activity whilst the external sectorperformanceisexpectedtobemodest.

For2016, theTrust’sdistributionperunitis not expected to be able to match thatof 2015 due to the rental void inAtriumShah Alam 2 during the AEI. However,the Manager remains committed to thesustainableandmeasuredgrowthofAtriumREITinordertocontinuetodeliverstablereturns to its unitholders. The Managerwill continue to pursue yield-accretiveacquisitions with focus on industrialproperties that meet our investment

criteria as well as value-creating asset-enhancement opportunities althoughmeeting sellers’ demands for assetvaluationmayprove tobechallenging. Inlinewithourproactiveassetmanagementstrategy, we will also continue to exploreany divestment opportunities for anyproperties that have achieved its optimalpotential/value and use the proceeds foreithernewacquisitionsorAEI.

Appreciation

On behalf of the Board of Directors ofAtrium REIT Managers Sdn Bhd, I wouldliketothankmyfellowBoardmembersfortheir advice and contributions throughoutthe year, our tenants and businessassociates, the regulatory authorities,investorsandunitholders, for their strongsupport. I would also like to thank themanagement team for the concertedeffort and hardwork in 2015 and I lookforwardtoanotherfruitfulyearaheadwiththecontinuedsupportofmyfellowBoardmembersandourvaluedstakeholders.

DATO’ DR IR MOHAMAD KHIR BIN HARUNChairman Atrium REIT Managers Sdn BhdDate:19February2016

Annual Report 2015

11Property Portfolio

Atrium Shah Alam 1

Property : AtriumShahAlam1

Address : Lot1-8,PersiaranJubliPerak,Seksyen22,40300ShahAlam,Selangor,Malaysia

Titledetails : GRN177482(formerlyknownasH.S.(D)No.80053)forLotNo.38264(formerlyknownasP.T.14366),PekanBaruHicom(formerlyknownasMukimofDamansara),DistrictofPetaling,StateofSelangorDarulEhsan.

Propertytype : Industrial

Description : AsinglestoreywarehouseandafourstoreyofficebuildingwithatotalNetLettableAreameasuringapproximately311,736sq.ft.

Yearofcompletion : 2005

Tenure : Freehold

Existinguse : Warehouseandoffice

Parkingspaces : 191carbays,105motorcyclebays,30lorrybays

Dateofacquisition : 2April2007

Costofacquisition : RM57,200,000

Lessee : MarelliAsiaPacificSdnBhd

Occupancy : 100%

LeasePeriod : 6years,expiringon31May2021

Majorcapitalexpenditure : RM308,837

Encumbrances : ThepropertyischargedtoafinancialinstitutiontosecureaShortTermRevolvingCreditfacilityofRM39.6million

Limitationintitle/interest : None

Latestvaluation : RM79,000,000

Dateoflastvaluation : 3December2015

Valuer : FirstPacificValuersPropertyConsultantsSdnBhd

FairValueadjustment : RM3,691,163

Netbookvalue : RM75,308,837


12 Property Portfolio

Atrium Shah Alam 2

Property : AtriumShahAlam2

Address : Lot7A,PersiaranJubliPerak,Seksyen22,40300ShahAlam,Selangor,Malaysia

Titledetails : LotNo.P.T.90heldunderH.S.(D)No.188265,PekanBaruHicom(formerlyMukimofDamansara),DistrictofPetaling,StateofSelangorDarulEhsan.


Description : A single storey warehouse and a double storey office building with a total Net LettableAreameasuringapproximately259,933sq.ft.


Tenure : Freehold





Tenant : None

Occupancy : N/A

TenancyPeriod : N/A

Majorcapitalexpenditure : Nil

Encumbrances : None





FairValueadjustment : (RM1,000,000)


Annual Report 2015

13Property Portfolio

Atrium Puchong

Property : AtriumPuchong

Address : No.2JalanPPU1,TamanPerindustrianPuchongUtama,Batu12½JalanPuchong,47100Puchong,SelangorDarulEhsan,Malaysia

Titledetails : LotNo.65108heldunderGeranNo.44178,PekanPuchongPerdana(formerlyMukimofPetaling),DistrictofPetaling,StateofSelangorDarulEhsan.


Description : AsinglestoreywarehouseandafourstoreyofficebuildingwithatotalNetLettableAreameasuringapproximately203,994sq.ft.


Tenure : Freehold





Tenant : TiongNamLogisticsSolutionsSdnBhd

Occupancy : Approximately73%

TenancyPeriod : 6months,expiring31March2016


Encumbrances : None





FairValueadjustment : RM1,500,000



14 Property Portfolio

Atrium USJ

Property : AtriumUSJ

Address : No.16,JalanTP6,TamanPerindustrianUEP,47620SubangJaya,SelangorDarulEhsan,Malaysia

Titledetails : Geran75650Lot46914MukimDamansara,DaerahPetaling,Negeri,Selangor.


Description : Asinglestoreywarehousewithannexeddoublestoreyofficebuilding(BlockA),asinglestoreywarehouse(BlockB)andasinglestoreywarehousewithannexeddoublestoreyofficebuilding(BlockC);withatotalNetLettableAreameasuringapproximately128,085sq.ft.


Tenure : Freehold



Dateofacquisition : 22December2011


Tenant : 1)SAF-Holland(Malaysia)SdnBhd(BlockA)2)CenturyTotalLogisticsSdnBhd(BlockB)3)SkynetWorldwide(M)SdnBhd(BlockC)

Occupancy : 100%

TenancyPeriod : BlockA-3years,expiringon31August2017BlockB-2years,expiringon31December2015*BlockC-3years,expiringon31July2017


Encumbrances : ThepropertyischargedtoafinancialinstitutiontosecureaTermLoanandBankGuaranteeFacilitiesofRM20,300,000





FairValueadjustment : RM100,000


* Century Total Logistics Sdn Bhd has renewed the tenancy for another 2 years and will be expiring on 31 December 2017.

Annual Report 2015

15Structure of Atrium Real Estate Investment Trust

ThefollowingdiagramillustratesthestructureofAtriumREITandindicatestherelationshipsbetweenAtriumREIT,theManager,thePropertyManagementCompany,theTrusteeandtheUnitholders:

Unitholders

Distributionsintheformofdividendsandotherdistributions

InvestmentinAtriumREIT

Ownershipofassets(VestedinTrustee)

Rentalincome

Hartamas AssetManagementSdn Bhd(PropertyManagementCompany)

Atrium REIT ManagersSdn Bhd (the Manager)

Real estate assetsSubject Properties-AtriumShahAlam1-AtriumShahAlam2-AtriumPuchong-AtriumUSJOther authorisedinvestments

Managementfees Trusteefees

Managementservices

Actsonbehalfofunitholders

Propertymanagementfees

Propertymanagementservices

Atrium REIT ManagersSdn Bhd (the Manager)

CIMB Commerce Trustee Berhad(the Trustee)


16 Performance Data

I) Portfolio Composition of the Trust

2015%

2014%

2013%

2012%

2011%

AtriumShahAlam1 33 31 32 31 31

AtriumShahAlam2 27 27 27 26 27

AtriumPuchong 21 20 19 20 19

AtriumRawang* - 4 4 4 4AtriumUSJ 13 13 13 13 12

94 95 95 94 93

Depositswithalicensedbank 6 5 5 6 7

100 100 100 100 100

II) Asset Value, Unit and Market Price information

2015 2014 2013 2012 2011

Assetundermanagement(RM’000) 221,900 226,200 221,700 208,100 194,700

Totalassetvalue(RM’000) 238,796 241,331 235,426 221,975 211,469

Netassetvalue(NAV)(RM’000) 173,272 168,505 164,401 150,706 137,151

Unitsincirculation(’000) 121,801 121,801 121,801 121,801 121,801

NAVperunit–afterproposeddistribution

-Asat31December(RM) 1.41 1.37 1.33 1.22 1.10

-HighestNAVfortheyear(RM) 1.42 1.37 1.33 1.22 1.10

-LowestNAVfortheyear(RM) 1.36 1.33 1.22 1.11 1.05

Marketpriceperunit

-Asat31December(RM) 1.10 1.19 1.30 1.29 1.07

-Highesttradedfortheyear(RM) 1.25 1.33 1.40 1.30 1.12

-Lowesttradedfortheyear(RM) 1.01 1.16 1.17 1.07 1.00

III) Distributions for Last 5 Years

Distribution Net Asset Value Per Unit (RM)

Per Unit (Sen) Date Before Distribution After Distribution

20111stQuarter 2.15 31May11 1.07 1.05

2ndQuarter 2.15 26Aug11 1.07 1.05

3rdQuarter 2.10 30Nov11 1.07 1.05

4thQuarter 2.13 29Feb12 1.13 1.10

2012

1stQuarter 2.20 31May12 1.13 1.11

2ndQuarter 2.20 30Aug12 1.13 1.11

3rdQuarter 2.20 30Nov12 1.13 1.11

4thQuarter 2.20 28Feb13 1.24 1.22

* The disposal of Atrium Rawang was completed during the financial year under review.

Annual Report 2015

17Performance Data

III) Distributions for Last 5 Years (continued)

Distribution Net Asset Value Per Unit (RM)

Per Unit (Sen) Date Before Distribution After Distribution

2013 1stQuarter 2.20 31May13 1.24 1.22

2ndQuarter 2.20 30Aug13 1.24 1.22

3rdQuarter 2.20 29Nov13 1.24 1.22

4thQuarter 2.20 28Feb14 1.35 1.33

2014

1stQuarter 2.20 30May14 1.35 1.33

2ndQuarter 2.20 29Aug14 1.35 1.33

3rdQuarter 2.20 28Nov14 1.35 1.33

4thQuarter 1.80 27Feb15 1.38 1.37

2015

1stQuarter 1.70 29May15 1.38 1.37

2ndQuarter 3.60 11Sep15 1.41 1.37

3rdQuarter 1.65 27Nov15 1.39 1.37

4thQuarter 1.30 29Feb16 1.42 1.41

IV) Performance of the Trust

2015 2014 2013 2012 2011

Totalreturn(%) (0.39) (1.79) 9.08 26.83 9.95

-Capitalgrowth(%) (7.56) (8.46) 2.36 19.44 1.90

-Incomedistribution(%) 7.17 6.67 6.72 7.39 8.05

Incomedistributionperunit(sen)

-Gross 8.25 8.40 8.80 8.80 8.53

-Net 8.25 8.40 8.80 8.80 8.53

Managementexpenseratio(%) 1.64 0.99 0.99 1.00 0.85

Portfolioturnoverratio(times) 0.05 - - - 0.19

V) Average Annual Return for Financial Year ended 31 December 2015

Atrium REIT (%) KLCI (%)

Oneyear (0.39) (3.44)

Sincelaunch(2April2007) 11.47 4.09 Totalreturnisbasedontheactualgrossincomedistributionandnetchangeinmarketpriceatthebeginningandendofthefinancialyear,overtheaveragemarketpriceofAtriumREITfortherespectivefinancialyears/period.

AverageAnnualReturniscomputedbasedonthetotalreturnperunitfortheperiod,averagedoverthenumberofyearsfortheperiod.

ThecalculationofMERisbasedontotalfeesofAtriumREITincurred,includingtheManager’sfees,Trustee’sfees,auditfees,taxagent’sfees,administrativeandotherexpenses,totheaveragenetassetvalueoftheTrustforthefinancialyearcalculatedonadailybasis.

ThecalculationofPTRisbasedontheaverageoftotalacquisitionandtotaldisposalofinvestmentsinAtriumREITforthefinancialyeartotheaveragenetassetvalueoftheTrustforthefinancialyearcalculatedonadailybasis.

Past performance is not necessarily indicative of future performance and that unit prices and investment returns may fluctuate.


18 Board of Directors and Management/Corporate Directory

MANAGERAtrium REIT Managers Sdn Bhd (710526-V)Principalplaceofbusiness:36-2,Jalan5/101C,OffJalanKaskasJalanCheras,56100KualaLumpurTel :03-91322810Fax :03-91329810Website :www.atriumreit.com.my

Registeredoffice:Unit30-01,Level30,TowerAVerticalBusinessSuite,Avenue3BangsarSouth,No.8,JalanKerinchi59200KualaLumpurTel :603-27839191Fax :603-27839111

TRUSTEECIMBCommerceTrusteeBerhad(313031-A)Principalplaceofbusiness17thFloor,MenaraCIMBJalanStesenSentral2KualaLumpurSentral50470KualaLumpurTel :03-22618888Fax :03-22619887

AUDITORSBDO(AF0206)CharteredAccountants

PROPERTY MANAGEMENT COMPANYHartamasAssetManagementSdnBhd(905055-U)Level13,BlockA,MenaraPrima,JalanPJU1/37,DataranPrima,47301PetalingJaya,SelangorDarulEhsanTel :03-78395555Fax :03-78395566

PRINCIPAL BANKERSMalayanBankingBerhadPublicBankBerhad

REGISTRARTricorInvestorServicesSdnBhd(118401-V)Unit32-01,Level32,TowerAVerticalBusinessSuite,Avenue3BangsarSouth,No.8,JalanKerinchi59200KualaLumpurTel :603-27839299Fax :603-27839222

BURSA MALAYSIA STOCK NAME AND CODEATRIUM5130

Board Of Directors

Dato’ Dr Ir Mohamad Khir Bin Harun Chairman and Non-Independent Non-Executive Director

Wong Sui EeExecutive Director

How Hu SonIndependent Non-Executive Director

Tor Peng SieIndependent Non-Executive Director

Soong Kwong HengIndependent Non-Executive Director

Management

Wong Sui EeExecutive Director

Chan Kum ChongChief Executive Officer

Chan Kum CheongChief Operating Officer

Lee Hooi HoongChief Financial Officer

Company Secretaries

Wong Wai Foong(MAICSA 7001358)Lim Poh Yen(MAICSA 7009745)

Board of Directors and Management of the Manager

Corporate Directory

Annual Report 2015

19Profile of Directors

DATO’ DR IR MOHAMAD KHIR BIN HARUN Chairman

Malaysian,aged65,wasappointed to theBoardon5October2009.Dato’Dr Ir MohamadKhirobtainedhis BSc (Hons) inElectricalEngineeringfromBrightonPolytechnicin1973,MScinCommunicationsEngineeringfromBrunelUniversity,Londonin1978andPhDinElectricalEngineeringfromUniversityofManchester,UnitedKingdomin1982.Dato'Dr.Ir.MohamadKhirhasaccumulatedavastpoolofknowledgeonthecommunicationsandinformationindustry.Startinghiscareerasayoungengineerwaybackin1973,Dato’DrKhirhadsuccessfullymadethe transition toabusiness-savvy technocratwhentheTelecomDepartmentwascorporatised in1987.Hehadrisenquicklyinhiscareer,takingonwide-rangingresponsibilitiesandwasholdingthepositionofChief,Groupbusinessrestructuring,thesecondhighestpositioninTelekomMalaysiaorTM,priortohisretirement.HewasPresidentoftheSeniorOfficerassociationsofTelekomMalaysiafrom1985to1996wherehehas initiatedprogramsonexecutivedevelopmentandhealthawarenesswhichwere lateradoptedby thecompany.Hewasactiveinsportshavingheldpositionsasviceanddeputypresidentsofthecompany’ssportclubfrom1982to1995.Hisotherexperiencesintheindustryinclude5yearsintheregulatorybodiesasAdvisortotheMinisterofEnergy,TelecommunicationsandPostsfrom1983to1985andthenasAdvisortotheChairmanoftheMalaysianCommunicationsandMultimediaCommissionfrom2006to2008.

WONG SUI EEExecutive Director

Malaysian,aged46,wasappointedtotheBoardon22September2005.MsWonggraduatedwithaBachelorofArtsmajoringinAccountingandFinancefromMiddlesexUniversity,London,in1991.SheisanAssociatememberoftheInstituteofCharteredAccountantsinEnglandandWales(ICAEW)since1994.MsWongbeganhercareerinKPMG,UnitedKingdomin1991asanAuditor.In1996,shejoinedPerdanaMerchantBankBerhadasAssistantVicePresidentfortwo(2)years.ShethenjoinedGloryBlitzIndustriesSdnBhd(“GBISB”)anditsrelatedcompaniesin1998.Duringher8-yeartenurewithGBISBanditsgroupofcompanies,sheformedtheteamtodevelopbuilttosuitindustrialpropertiesintheKlangValleyforthegroup’smultinationalclientsincludingCEVALogistics(formerlyknownasTNTLogistics),ExelLogistics(nowpartoftheDHLGroup),Danzasmal(nowpartoftheDHLGroup),UnileverMalaysia,SilverstoneTyresandothers.Currently,sheisalsoontheBoardofDirectorsofAlphaNetrise(M)SdnBhd,AmpleCosmosSdnBhdandKilatIdamSdnBhd.

TOR PENG SIEIndependent Non-Executive Director

Malaysian, aged57,wasappointed to theBoardon17November2006.MrTorgraduatedwith aBachelor ofScience fromCampbellUniversity,NorthCarolina,UnitedStatesofAmerica in1982.He isaholderof theRealEstateAgentLicencefromtheBoardofValuers,AppraisersandEstateAgentsMalaysiasince1993.MrTorhasovertwenty(20)yearsexperienceintherealestateindustry,wherehebeganhiscareerinRahim&Co.CharteredSurveyorSdnBhdin1984asaValuationExecutiveandwassubsequentlypromotedasaRealEstateNegotiator.In1988,heworkedwithTheGoldenTriangleRealEstateAgentsinitiallyasaRealEstateAgentandlaterbecameaDirectorofthesaidcompany.In1999,hejoinedPacificLandmarkRealEstateAgents.HeiscurrentlythePrincipalofPacificLandmarkRealEstateAgents.

HOW HU SONIndependent Non-Executive Director

Malaysian,aged66,wasappointedtotheBoardon17November2006.MrHowgraduatedfromBrightonPolytechnic,UnitedKingdomwithaBachelorofScience(Hons)inCivilEngineeringin1975.In1976,heobtainedhisMasterofSciencefromImperialCollegeofScience&Technology,London.HeisamemberoftheInstitutionofEngineers,MalaysiaandisaregisteredprofessionalEngineerwiththeBoardofEngineers,Malaysia.Hebeganhiscareerin1977asaStructuralEngineerwithJabatanKerjaRayafortwo(2)years.Thereafter,hejoinedTahirWongSdnBhdasitsSeniorStructuralEngineerandwassubsequentlypromotedtoSeniorAssociate.Duringhis14yearsinTahirWongSdnBhd,hewasinvolvedinprojectssuchasSubangParade,theRoyalMalaysianNavyBaseinSarawak,PuteriPanPacificHotel,JohorandtheSelangorTurfClub.Currently,heisaDirectorofPakatanCergasSdnBhd,aconsultancycompanyinvolvedincivilandstructuralengineering.SomeoftheprojectsthathewasinvolvedinaretheconstructionofBukitCeylonCondominium,CPTower,EastinHotelandPhileoDamansara.HeisalsoaDirectorofYongPengBatuBataBerhad.

SOONG KWONG HENGIndependent Non-Executive Director

Malaysian,aged66,wasappointedtotheBoardon17November2006.Mr.SoonggraduatedwithaBachelorofEconomicsfromUniversitiMalayain1972.MrSoonghasmorethanthirty(30)yearsexperienceintaxrelatedissues.Afterhisgraduation,hebeganhiscareerintheDepartmentofInlandRevenueMalaysiaforthree(3)years.In1975,hejoinedChanKingSang&Co.asitsTaxManagerforten(10)years.Since1985,heservedasaTaxPrincipalforK.S.TaxationServicesSdnBhd.Currently,heisalsoontheBoardofDirectorsofGlobalGainSdnBhd,SegamatHoldingsSdnBhdandCompagnieDuMondeSdnBhd,whicharecompaniesinvolvedinpropertyandequityinvestments.


20 Profile of Chief Executive Officer

CHAN KUM CHONGChief Executive Officer

Malaysian,aged60,wasappointedasChiefExecutiveOfficeron1April2010.Mr.ChangraduatedfromPortsmouthPolytechnic(nowknownasUniversityofPortsmouth)in1980withaBachelorofScienceinQuantitySurveying.Mr.ChanbeganhiscareerasaGraduateQuantitySurveyorwithaconsultantquantitysurveyingfirm,JuruUkurBahanMalaysiaSdn.Bhd.assistingtheseniorquantitysurveyorinpreandpostcontractadministrationinthecompletionofMenaraMaybank,redevelopmentofSubangInternationalAirport,TelekomTrainingCentre,amongstothers.Mr.ChanthenjoinedTTDIDevelopmentSdn.Bhd.in1984andhassuccessfullymanagedandcompletedhousingschemesinTamanTunDr.Ismail,TamanTTDIJaya,DesaPandanandDesaBakti.InJune1995,hewasassignedtooverseetheoperationofthein-houseconstructioncompany,PanelexSdn.Bhd.asGeneralManager-Operation.HethenjoinedSyarikatT.D.Sdn.Bhd.in1999asaProjectDirectorlookingafterseveralbuildingandturnkeyprojects.Thereafter,hejoinedVistanet(M)Sdn.Bhd.in2002,anin-houseconstructioncompanyofMaylandPropertiesSdn.Bhd.,tomanagealltheirin-houseconstructionprojectswithGrossDevelopmentValuesinexcessofRM300million,comprisingofserviceapartments,shopofficesandashoppingcomplex.InOctober2003hejoinedScoreOptionSdn.Bhd.asaProjectDirector,managinga200acresdevelopmentinPuchongcomprisingamixedresidentialandcommercialdevelopment,aJ.V.projectwithGlomacAllianceSdn.Bhd.,asubsidiaryofGlomacBerhad.In2005,hejoinedECAlamjayaSdn.Bhd.asitsChiefExecutiveOfficertooverseeashoppingcomplexandhoteldevelopmenttotallingRM100million.

Other Directorship of Public CompaniesMr.Chanhasnootherdirectorshipwithanypubliccompanies.

Family Relationship with Director and/or Major UnitholderMr.ChanisthebrotherofMrChanKamTuck,whoisamajorunitholderoftheAtriumREIT.Savedasdisclosed,MrChandoesnothaveanyfamilyrelationshipwithanydirectorand/ormajorunitholderoftheAtriumREIT.

Conflict of InterestSaveforMrChan’sinterestinAtriumREIT(asdisclosedunderUnitholdingsofDirectorsandRelatedPartiesinthenotestothefinancialstatements),noconflictofinteresthasarisenduringthefinancialyearunderreview.

Conviction of OffencesMr.Chanhasnotbeenconvictedofoffenceswithinthepast10years.

Annual Report 2015

21Statement of Corporate Governance

AtriumREITManagersSdnBhd, theManager ofAtriumReal Estate InvestmentTrust (“AtriumREIT”) has adopted an overall corporategovernance frameworkdesignedtomeetbestpracticeprinciples. TheManageralsorecognises thataneffectivecorporategovernanceculture iscritical to itsperformanceandconsequently, thesuccessofAtriumREIT,which itmanages. Inparticular, theManagerhasanobligationtoacthonestly,withduecareanddiligence,andinthebestinterestoftheunitholdersofAtriumREIT(“Unitholders”).

The following segments describe the Manager’s main corporate governance policies and practices which are guided by the measuresrecommendedintheSecuritiesCommission(“SC”)GuidelinesonRealEstateInvestmentTrusts(“REITsGuidelines”),theSecuritiesCommissionAct1993(“SCA”),theCapitalMarketandServicesAct2007(“CMSA”)theMainMarketListingRequirements(“ListingRequirements”)ofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)andtheMalaysianCodeonCorporateGovernance.

Role of the Manager

Manager of Atrium REIT

TheManagerhasgeneralpowersofmanagementovertheassetsofAtriumREIT.TheManager’smainresponsibilityistomanageAtriumREIT’sassetsandliabilitiesinthebestinterestoftheUnitholders.

TheprimaryroleoftheManageristosetthestrategicdirectionofAtriumREITandgiverecommendationstoCIMBCommerceTrusteeBerhad(formerlyknownasBHLBTrusteeBerhad)(“Trustee”),asTrusteeofAtriumREIT,ontheacquisition,divestmentandenhancementofassetsofAtriumREITinaccordancewithitsstatedinvestmentstrategy.

Amongstothers,thegeneralfunctions,dutiesandresponsibilitiesoftheManagerincludethefollowing:

(a) tocarryouttheactivitiesinrelationtothemanagementofAtriumREITanditsportfolioofassetsinaccordancewiththeprovisionsoftheTrustDeeddated20November2006andamendedbytheSupplementaryDeeddated25November2008(collectivelyknownas“theDeed”);

(b) touseitsbestendeavourstoensurethatthebusinessofAtriumREITiscarriedoutandconductedinaproperandefficientmannerandtoconductalltransactionswithorforAtriumREITatarm’slengthandonnormalcommercialterms;

(c) toissuetheannualreportofAtriumREITtotheUnitholderswithintwo(2)monthsofitsfinancialyearend;

(d) toattendtoallenquiriesfromtheUnitholders,tenants,media,governmentbodies,etc;

(e) tosupervisethePropertyManagerwhichprovidespropertymanagementservicesinrelationtoAtriumREIT’spropertiespursuanttothepropertymanagementservicesagreement;and

(f) toensurethatAtriumREITisincompliancewiththeapplicableprovisionsofthe,REITsGuidelines,SCA,CMSA,ListingRequirementsorBursaSecurities,andanyotherapplicablelaws.

Atrium REIT is externally managed by the Manager and accordingly,Atrium REIT has no personnel of its own.The Manager appointsexperiencedandwell-qualifiedmanagementpersonneltohandletheday-to-dayoperations.AllDirectorsandemployeesoftheManagerareremuneratedbytheManagerandnotbyAtriumREIT.

AtriumREITManagersSdnBhd is theappointedManagerofAtriumREIT inaccordancewith the termsof theDeedwhichoutlines thecircumstancesunderwhichtheManagercanberetired.

Directors of the Manager

The Board

TheBoard is entrustedwith the responsibility of overall management and corporate governance of theManager including establishinggoalsformanagementandmonitoringtheachievementofthesegoals.TheBoardisalsoresponsibleforchartingthestrategicdirection,developmentandcontroloftheManagerandhasadoptedtheprimaryresponsibilitiesaslistedintheREITGuidelinesaswellastherolesanddutiessetoutintheREITGuidelines,whichfacilitatethedischargeoftheDirectors’stewardshipresponsibilities.


22 Statement of Corporate Governance

Board Composition

TheBoardpresentlyconsistsoffive(5)memberscomprisingone(1)Non-IndependentNon-ExecutiveDirector,one(1)ExecutiveDirectorandthree(3)IndependentNon-ExecutiveDirectors.Thediversebackgroundofthememberswhocomefromvariousfieldssuchasengineering,financial, real estate and management provide a broad spectrum of skills, experience and invaluable perspectives to overseeing themanagementoftheManager.TheprofilesofthemembersoftheBoardareprovidedinpage19oftheAnnualReport.

TheBoarddiversityintermsofgender,ethnicity,professionalbackgroundandexperienceareillustratedbelow:

TheBoardisoftheviewthatitscurrentmemberswho,asagroupprovidethenecessarycorecompetenciesisadequateandthatthecurrentBoardsizeisappropriate,takingintoconsiderationthenature,sizeandscopeofAtriumREIT’soperations.

TheChairmanoftheBoardisresponsiblefortheconductoftheBoardandensuresthattheBoard’sdiscussionsareconductedinsuchawaythatallviewsaretakenintoaccountanddiscussedatlengthbeforeadecisionismade.TheExecutiveDirectorandtheChiefExecutiveOfficer,supportedbythemanagementteamareresponsibleforrunningthebusinessonaday-to-daybasis,organizationaleffectivenessandimplementationoftheBoard’spolicies,strategiesanddecisionsasplannedandinaccordancewiththeDeed,SecuritiesCommissionActandREITGuidelines.ThisclearseparationofrolesbetweentheChairmanandtheChiefExecutiveOfficer,providesahealthy,independentandprofessionalrelationshipbetweentheBoardandManagement.

Gender

Designation

Ethnicity

Professional Background

1 1

1

1 3

4 4Male

IndependentNon-ExecutiveDirector

Accounting&Finance

ExecutiveDirector

EngineeringNon-IndependentNon-ExecutiveDirector

Economics

RealEstate

Malay

Female Chinese

11

1

2

Annual Report 2015


TheBoardfocusesmainlyonstrategy,financialperformanceandcriticalbusinessissues,including:-· Thestrategicbusinessplans· Keyfinancialperformanceindicators· Principalrisksandtheirmanagement· Successionplanningforseniormanagement· Investorsandunitholdersrelationsprogrammes· Systemsofinternalcontrol

IndependentNon-ExecutiveDirectorshavetheresponsibilitytoensurethatthestrategiesproposedbytheExecutiveDirector,ChiefExecutiveOfficerandmanagementarefullydiscussedandexamined,takingaccountofthelongterminterest,notonlyoftheUnitholders,butalsoofemployees,customers,suppliers,environmentandthemanycommunitiesinwhichAtriumREITconductsitsbusiness.

Board Meetings

Boardmeetingsarescheduledatleastfour(4)timesperannumtoreviewtheoperationsofAtriumREITandtoapprovethequarterlyandannualfinancialstatementsofAtriumREIT.Additionalmeetingsareheldasandwhenurgentissuesandimportantdecisionsneedtobetakenbetweenthescheduledmeetings.

TheBoardmetfour(4)timesduringthefinancialyearended31December2015.ThenumberofmeetingsattendedbyeachDirectorisasfollows:

Directors Designation Attendance

Dato’DrIrMohamadKhirBinHarun Non-IndependentNon-ExecutiveChairman 4/4

WongSuiEe ExecutiveDirector 4/4

HowHuSon IndependentNon-ExecutiveDirector 3/4

TorPengSie IndependentNon-ExecutiveDirector 4/4

SoongKwongHeng IndependentNon-ExecutiveDirector 4/4

Access to and Supply of Information and Advice

AllBoardmembersaresuppliedwithinformationonatimelymannerinordertodischargetheirresponsibilities.TheAgendatogetherwiththefullsetofBoardpaperscontaininginformationrelevanttotheBoardmeetingarecirculatedtotheDirectorspriortotheBoardmeetings.ThereissufficienttimefortheDirectorstoreviewandseekclarificationwherenecessarypriortothemeetingbeingheldandthisprocessenablestheDirectorstomakebetterandinformeddecisions.

ThereisascheduleofmattersreservedspecificallyfortheBoard’sdecision,includingtheapprovaloftheManager’sstrategicplansandbudgets forboth theManagerandAtriumREITwhich includesacquisitionanddisposalofmajorassets,major investments, reviewandapprovethekeypolicies,proceduresandauthoritylimits.

AllDirectorshaveaccesstotheadviceandservicesoftheCompanySecretaryandhastherighttoseekindependentprofessionaladvicewhennecessaryindischargingtheirduties,makingacquisitiondecisionsandcomplyingwithrelevantlegislationsandregulations.

Appointments to the Board

TheExecutiveDirectormakesrecommendationsontherequirementandsuitabilityofcandidatesnominatedforappointmenttotheBoardandthefinaldecisionlieswiththeentireBoardtoensurethattheresultingmixofexperienceandexpertiseofmembersoftheBoardisbalancedwithrepresentationfromtherelevantsectorsofindustrytoprovideoptimalinputstoaddresstheissuesaffectingtheManagerandAtriumREIT.

Directors’ Remuneration

Theobjectiveoftheremunerationpolicyistoattract,retainandmotivatetheDirectorstosuccessfullycarryontheManager’sandAtriumREIT’soperations.TheBoardbelievesthattheremunerationshouldbesufficienttoattract,retainandmotivatetheDirectorsofthenecessarycaliber,expertiseandexperiencetomanagetheManager’sandAtriumREIT’soperations.


24 Statement of Corporate Governance

Accountability and Audit

Financial Reporting

TheBoardisresponsibleforensuringthatthefinancialstatementsgiveatrueandfairviewofthefinancialpositionofAtriumREITasat31December2015andofitsfinancialperformance,thechangesinnetassetvalueandcashflowsforthefinancialyearthenendedinaccordancewithMalaysianFinancialReportingStandardsandInternationalFinancialReportingStandards.

Relationship with Auditors

TheBoardmaintainsatransparentrelationshipthroughouttheirassociationwiththeexternalauditors.Theappointmentofexternalauditors,whomaybenominatedbytheManager,isapprovedbytheTrustee.TheauditorsappointedmustbeindependentoftheManagerandTrustee.TheremunerationoftheAuditorisapprovedbytheTrustee.

Internal Control

TheBoardacknowledges its responsibility for theManager’s systemof internal controlswhichcoversfinancial control, operational andcompliancecontrolsaswellasriskmanagement.

TheStatementofInternalControlfurnishedonpages26to27oftheAnnualReportprovidesanoverviewofthestateofcontrolwithintheManager.

Management of Business Risk

RecognisingandmanagingriskiscentraltothebusinessandtoprotectingtheUnitholders’interestsandvalue.TheManageroperateswithinoverallguidelinesandspecificparameterssetbytheBoard.Eachtransactioniscomprehensivelyanalysedtounderstandtherisksinvolved.Responsibilityofmanagingrisksliesinitiallywiththebusinessunitconcerned,workingwithintheoverallstrategyoutlinedbytheBoard.

TheBoardmeetsquarterlyormoreoften,ifnecessaryandreviewsthefinancialperformanceoftheManagerandAtriumREITagainstapreviouslyapprovedbudget.TheBoardwillalsoreviewthebusinessrisksofAtriumREITandwillactuponanycommentsfromtheAuditor.Inassessingbusinessrisk,theBoardconsiderstheeconomicenvironmentandrisksrelevanttothepropertyindustry.TheBoardreviewsmanagementreportsandfeasibilitystudiesonproposedpropertyacquisitionpriortoapprovingthetransaction.

Related Party Transactions

TheManagerwillcomplywithallrequirementsaslaidoutintheREITGuidelines,theDeedandtheListingRequirementsofBursaSecurities.

TheManagerhasestablishedproceduresthatwillensurethatallrelatedpartytransactionsundertakenareinfullcompliancetotheREITGuidelinesasdetailedbelow:

(a) onanarm’slengthbasis;(b) inthebestinterestsoftheUnitholders;(c) inrelationtoarealestatetransaction:

(i) transactedatapricethatisequivalenttothevalueassessedintheindependentvaluationreport;(ii) consentedbytheTrustee;and(iii) consistentwiththeinvestmentobjectivesandstrategiesofAtriumREIT;and

(d) adequatelydisclosedtotheUnitholders.

However,arealestatemaybetransactedatapriceotherthanasspecifiedin(c)(i)aboveprovidedthat:

(a) foracquisitions,thepriceisnotmorethan110%ofthevalueassessedinthevaluationreportreferredtoin(c)(i)above;(b) fordisposals,thepriceisnotlessthan90%ofthevalueassessedinthevaluationreportreferredtoin(c)(i)above;and(c) theTrustee provides a written confirmation that the transaction is based on normal commercial terms, at arm’s length, and not

prejudicialtotheUnitholders’interest.

Annual Report 2015


Wherethetransactionvaluewithrelatedpartiesinrelationtoarealestateisequaltoorgreaterthan5%ofthetotalassetvalueofthefund(afteracquisition),thepriorapprovaloftheUnitholdersbywayofanordinaryresolutionisrequired.However,ifthetransactionvaluedoesnotexceed5%ofthetotalassetvalueofthefund(afteracquisition),theTrusteemustprovideawrittenconfirmationthatthetransactionisbasedonnormalcommercialterms,atarm’slength,andnotprejudicialtotheUnitholders’interests.

Whistle Blowing Policy

TheBoardhasputinplaceprocedurestoprovideemployeesoftheManagerwithdefinedandaccessiblechannelstoreportonsuspectedfraud,corruption,dishonestpracticesorothersimilarmattersrelatingtoAtriumREITortheManager,andfortheindependentinvestigationofanyreportsbyemployeesandappropriatefollowupaction.

Theaimofthewhistleblowingpolicyistoencouragethereportingofsuchmattersingoodfaith,withtheconfidencethatemployeesmakingsuchreportswillbetreatedfairly,andtotheextentpossible,beprotectedfromreprisal.

Communication with Unitholders and Investors

TheBoardacknowledgesandappreciatestheimportanceofregularcommunicationwiththeUnitholdersandinvestorstoensurethattheyarewellinformedoftheactivitiesandperformanceofAtriumREIT.Thecommunicationchannelsareviaannualreports,quarterlyfinancialreportsandthevariousdisclosuresandannouncementsontheBursaSecurities’website.

AnotherprincipalavenueofcommunicationwithitsUnitholdersisAtriumREIT’sAGM,whichprovidesausefulplatformfortheUnitholderstoengagedirectlywiththeManager’sBoardandManagement,theTrusteeandtheAuditor.TheManagerislookingforwardtosolicitfeedbacksandviewsfromtheUnitholdersandanswerUnitholders’questiononallissuespertainingtoAtriumREITattheAGM.ThenoticeoftheAGMandrelatedpaperswillbeforwardedtotheUnitholderswithadequatetimenoticebeforethemeeting.AlltheUnitholdersareinvitedandencouragedtoattendAtriumREIT’sAGMandtoactivelyparticipateintheproceedingsbypostingquestionsontheproposedresolutions(ifany)andtoseekclarificationontheTrust’sbusinessandperformance.

AtriumREIThasalsoestablishedacorporatewebsite,www.atriumreit.com.my,fortheUnitholdersandthepublictoaccessforcorporateinformationandlatestbusinessdevelopmentofAtriumREIT.

Other Information

Family Relationship with any Director and/or Major Unitholder

NoneoftheDirectorsoftheManagerhasanyfamilyrelationshipwithanyotherDirectorsorMajorUnitholders.

Conflict of Interest

SavefortheDirectorsoftheManager’sinterestinAtriumREIT(asdisclosedunderDirectors’InterestintheManager’sReport),noconflictofinteresthasarisenduringthefinancialyearunderreview.

Convictions for Offences

NoneoftheDirectorsoftheManagerhavebeenconvictedforoffenceswithinthepast10years.

Material Contracts

TherewerenomaterialcontractsenteredbytheTrustthatinvolvedtheDirectorsoftheManagerorSubstantialUnitholdersoftheTrustduringthefinancialyearunderreview.

Directors’ Training

TheDirectorsareencouragedtoattendbriefingsandseminars tokeepabreastwith the latestdevelopments in the industry.Duringtheyear,theDirectorsattendedvariouscourses/seminarsinrelatedtotheirresponsibilitiesanddevelopmentsintheindustry.Amongcourses/seminarsattendedincludes“Top18LessonsWeLearn–PlayingDetectivewithFinancialStatements”,“OilPriceCrisis,CurrencyWarandPortfolioStrategies”and“AdvocacySessionsonManagementDiscussionandAnalysisStatement”.


26 Statement of Internal Control

TheBoardofDirectors(“theBoard”)ofAtriumREITManagersSdnBhd,theManagerofAtriumRealEstateInvestmentTrust(“AtriumREIT”)hasvoluntarilyadopted thebestpractices incorporategovernancebysettingupan InternalAudit function,whichhadbeenoutsourcedtoanindependentprofessionalfirm,althoughitisnotcompulsoryforAtriumREITtocomplywithsuchrequirementsundertheSecuritiesCommission Malaysia Guidelines on Real Estate InvestmentTrusts (“REIT Guidelines”) and Main Market Listing Requirements (“ListingRequirement”)ofBursaMalaysiaSecuritiesBerhad.

TheBoardhaspreparedastatementonthestateoftheManager’sinternalcontrolsforinclusioninthisAnnualReportforthefinancialyearended31December2015(“FY2015”)

Responsibility

TheBoardacknowledges that ithasa responsibility tomaintainasoundandeffectivesystemof internalcontroland riskmanagementpractices within the Manager in order to meet the business objectives of the Manager.The business objectives, amongst others, is tomanageAtriumREITbyachievingitsmission,i.e.tomaximiseincomeinordertorewardUnitholderswithacompetitiverateofreturnfortheirinvestmentsthroughregularandstabledistributionsandachievinglong-termgrowthindistributionsandNetAssetValueperunit.

Asthereareinherentlimitationsinanysystemofinternalcontrols,suchsystemsaredesignedtoreduceratherthaneliminateallrisksthatmayimpedetheachievementoftheManager’sbusinessobjectives.Therefore,theinternalcontrolsystemcanonlyprovideareasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.

Key Features of the Internal Control System Established

Control Environment

• Organisation Structure and Authorisation Procedures TheManagermaintainsaformalorganisationstructurewithwell-defineddelegationofresponsibilitiesandaccountabilitywithinthe

Manager’sSeniorManagement.Itsetsouttherolesandresponsibilities,appropriateauthoritylimits,reviewandapprovalproceduresinordertoenhancetheinternalcontrolsystemoftheManager’svariousoperations.

• Company Policies and Procedures TheManagerhasdocumentedpoliciesandproceduresthataretoberegularlyreviewedandupdatedtoensurethatitmaintainsits

effectivenessandcontinuestosupportthebusinessactivitiesoftheManagerandAtriumREITatalltimes.

Monitoring and Review

Managementmeetingsarescheduledtobeheldonaregularbasistodiscussandreviewthebusinessplanning,budgeting,financialandoperationalperformances.

• Financial and Operational Review ThemonthlymanagementaccountsandthequarterlyfinancialstatementsoftheManagerandAtriumREITcontainingkeyfinancial

results,operationalperformanceresultsandcomparisonsofperformanceagainstbudgetarepresentedtotheBoardfortheirreview,considerationandapproval.

• Business Planning and Budgeting Review TheBoardplaysanactiveroleindiscussingandreviewingthebusinessplans,strategies,performanceandrisksfacedbytheManager

andAtriumREIT.

Internal Audit Function

ThefeesfortheinternalauditfunctionoutsourcedtoPKFAdvisorySdnBhdforFY2015amountedRM9,900,excludingGoodsandServicesTaxanddisbusements(FY2014:RM9,900,excludingGoodsandServicesTaxanddisbusements).TheoutsourcedinternalauditorsareengagedtoassisttheBoardinprovidingindependentassessmentoftheadequacy,efficiencyandeffectivenessoftheManager’sinternalcontrolsystems.TheresultsoftheirreviewofthebusinessprocessesweretabledtotheBoardattheirscheduledmeetings.Theinternalauditorsarealsotaskedtofollowuponthestatusoftheimplementationofcorrectiveactionstoaddresscontrolweaknessestoensurethattheseactionshavebeensatisfactorilyimplemented.

Annual Report 2015

27Statement of Internal Control

ThescopeoftheinternalauditfunctionforFY2015entailedthefollowing:

Investment properties · Toensureinvestmentpropertiesarewellmaintained;and

· To review effectiveness of document control for contracts and agreements in relation toinvestmentproperties.

Cash at Bank · Ensurethatpaymentsandreceiptsareproperlyauthorised,supportedandrecorded;and

· Ensurethatbankreconciliationsarepreparedandapproved.

Duringthefinancialyearunderreview,therewasnononcompliancenotedwhichhadamaterialimpactontheManager’sandAtriumREIT’sfinancialperformanceoroperations.

29. MANAGER’S REPORT

37. STATEMENT BY DIRECTORS OF THE MANAGER

37. STATUTORY DECLARATION

38. TRUSTEE’S REPORT

39. INDEPENDENT AUDITORS’ REPORT

40. STATEMENT OF FINANCIAL POSITION

41. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

43. STATEMENT OF CHANGES IN NET ASSET VALUE

44. STATEMENT OF CASH FLOWS

45. NOTES TO THE FINANCIAL STATEMENTS

73. SUPPLEMENTARY INFORMATION ON REALISED AND

UNREALISED UNDISTRIBUTED INCOME

Financial Statements

Annual Report 2015

29Manager’s Report

About the MAnAger

Atrium REIT Managers Sdn Bhd (“Manager”) was established in 2005 and is a subsidiary of Glory Blitz Industries Sdn Bhd. The Manager’s Board of Directors and key personnel comprise experienced individuals in their respective fields of expertise.

PrinciPAl Activity of the MAnAger

The principal activity of the Manager is the management of real estate investment trusts. There has been no significant change in the nature of this activity during the financial year.

the trust And its PrinciPAl Activity

Atrium REIT was established by a trust deed entered into on 20 November 2006 and amended by the Supplementary Deed dated 25 November 2008 (collectively known as “the Deed”) between the Manager and BHLB Trustee Berhad (now known as CIMB Commerce Trustee Berhad) (“Trustee”). Atrium REIT was listed on the Main Board of Bursa Malaysia Securities Berhad on 2 April 2007.

The principal activity of Atrium REIT is to own and invest in real estate and real estate-related assets, whether directly or indirectly through the ownership of single-purpose companies whose principal assets comprise real estate. The investment portfolio of, Atrium REIT as at 31 December 2015 comprise Atrium Shah Alam 1, Atrium Shah Alam 2, Atrium Puchong and Atrium USJ (collectively called the “Properties”). These Properties are located at prime sites and tenanted by subsidiaries of multinational companies and established local companies.

MAnAger’s investMent objectives And strAtegies

The Manager’s investment objectives are to maximize income in order to reward unitholders annually with a stable distribution of income and to acquire quality assets to achieve long term growth in the Net Asset Value (“NAV”) per unit. The Manager has achieved its objective of rewarding unitholders with stable and attractive return through consistent distribution of income for every quarter since the listing of the Trust on 2 April 2007.

The Manager intends to achieve Atrium REIT’s investment objectives through three key strategies:-

(i) organic growth srategy

The Manager’s strategy involves proactive asset management, maximising tenant retention and creating leasing opportunities and strong budgetary controls to maximize returns.

(ii) Acquisition strategy

The Manager seeks to increase cashflows and yields, together with growth in distribution per unit and NAV per unit through selective acquisitions.

In evaluating acquisition opportunities, the Manager adopts the following investment criteria:

• yieldaccretive;• qualityandnatureofbusinessoftenant;• tenancytermsandconditions;• locationofproperty;• potentialcapitalappreciation;• landtenure;and• buildingdesigns,specificationsandrepairsandmaintenance.

The Manager intends to hold the properties on a long-term basis. However, as and when appropriate, the Manager may dispose the property and such proceeds may be reinvested in new real estates with better yields and growth potential and/or distributed to unitholders.

Atrium reit Managers sdn bhd, the Manager of Atrium real estate investment trust (“Atrium reit” or “trust”), is pleased to present the Manager’s report together with the audited financial statements of Atrium reit for the financial year ended 31 december 2015 (fy2015).


30

(iii) financing strategy

The Manager will comply with the provisions of the Deed and the Securities Commission Guidelines on Real Estate Investment Trusts (“REITs Guidelines”) in relation to the maximum level of permitted borrowings which is currently set at 50% or any other percentage as stipulated by the REITs Guidelines from time to time, of its total asset value.

The Manager intends to use a combination of debt and equity to fund future acquisitions. If it is deemed appropriate and in compliance with the REITs Guidelines, a hedging strategy to manage the risks associated with changes in interest rates relating to its borrowings may be adopted. Borrowings can be in the form of bank borrowings or through the issuance of commercial papers/bonds where Atrium REIT will have to be credit-rated.

investMent Policies And coMPliAnce With reit guidelines

(i) investment limits and restrictions Atrium REIT’s investments may be allocated in the following manner, as prescribed by the REITs Guidelines:

(a) At least 50% of the total asset value of Atrium REIT must be invested in real estate assets and/or single purpose companies at alltimes;and

(b) Investment in non-real estate related assets and/or cash, deposits and money market instruments must not exceed 25% of Atrium REIT’s total asset value.

(ii) Authorised investments Atrium REIT is allowed to invest in real estate, single-purpose companies whose principal assets comprise real estate, real estate-

related or non real estate-related assets, liquid assets, asset-backed securities, listed or unlisted debt securities, and any other investment which is permissible under the REITs Guidelines or otherwise permitted by the Securities Commission.

Atrium REIT invests primarily in strategically located properties tenanted to logistics companies and manufacturer and will continue to look for opportunities in these types of properties. However, Atrium REIT does not intend to limit itself to industrial properties and may consider other types of properties which meet its investment criteria.

MAnAgeMent discussion And AnAlysis

review of Performance As at As at As at 31 december 31 december 31 december 2015 2014 2013

Net Asset Value (RM’000) 173,272 168,505 164,401Units in circulation (‘000) 121,801 121,801 121,801Net Asset Value per unit (RM) 1.41 1.37 1.33Market price per unit (RM) 1.10 1.19 1.30Highest traded price per unit during the year (RM) 1.25 1.33 1.40Lowest traded price per unit during the year (RM) 1.01 1.16 1.17

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comparison of results fy2015 fy2014 fy 2013 rM’000 rM’000 rM’000 Gross Rental Income 12,867 16,153 16,480Net Income (realised) 11,134 10,323 10,813Distributable Income (realised) 10,034 10,323 10,813Income Distribution 10,049 10,231 10,718Distribution Per Unit (sen) 8.25 8.40 8.80Distribution Yield (%) - based on IPO price (RM1.00) 8.25 8.40 8.80 - based on market price as at 31 December 7.50 7.06 6.77Management Expense Ratio (%) 1.64 0.99 0.99

Atrium REIT’s net income (realised) for FY2015 is higher than that achieved in FY2014 even though there was a significant decrease in the gross rental income and an increase in the Trust’s expenses for FY2015. The significant decrease in the gross rental income is due mainly to the rental void in Atrium Puchong and Atrium Shah Alam 2 whilst the increase in Trust’s expenses is due mainly to the real estate agents’ fees for lease/rental of Atrium Shah Alam 1, Atrium Puchong and disposal of Atrium Rawang.

Asset enhancement initiatives (“Aei”)

For the year under review, Atrium REIT has commenced the following AEI to generate higher rental yields, maintaining occupancy, create a better operating business environment for our tenants as well as to enhance property condition and value.

Atrium shah Alam 1

The AEI are expected to be completed by first quarter of 2016 at a cost of approximately RM3.0 million, excluding Goods and Services Tax. The AEI mainly involved the replacement of one new passenger lift, changing of the whole warehouse lighting system, upgrading of the power supply, installation of additional translucent sheets around the perimeter of the warehouse building, external wall and facade repainting and upgrading of the toilets in the office building.

Atrium shah Alam 2

With the previous tenant, CEVA Logistics (Malaysia) Sdn. Bhd. having moved out of the premises, the Manager took the opportunity to undertake AEI for the property involving mainly the upgrading and refurbishment of the whole warehouse floor slab and roof, replacement of the warehouse lighting system, replacement of the rain water goods, external wall and facade repainting as well as sheet piling works at the rear boundary of the property. The AEI commenced in the first quarter of 2016 and is expected to be fully completed by the third quarter of 2016 at a total contract sum of approximately RM15.4 million, excluding Goods and Services Tax. capital Management

The Manager understands that an effective capital structure is crucial to the performance of the Trust. In view of this, the Manager has adopted and maintained an appropriate debt-equity structure to meet the Trust’s funding needs whilst ensuring that unitholders’ returns are sustainable and optimized.

Both the Term Loan (“TL”) and Short Term Revolving Credit (“STRC”) are secured facilities based on floating rates. The variable rates for the TL and STRC ranged from 4.30% to 4.69% per annum during FY2015.

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Summary of Atrium REIT’s current and historical gearing is as shown below:

2015 2014 2013 2012 2011

Total Borrowings (RM’000) 59,600 65,000 65,000 65,000 65,000

- STRC (RM’000) 39,600 45,000 45,000 45,000 45,000

- TL (RM’000) 20,000 20,000 20,000 20,000 20,000

Total Asset (RM’000) 238,796 241,331 235,426 221,975 211,469

Gearing (%) 24.96 26.93 27.61 29.28 30.74

Interest Rate (%) 4.30 to 4.69 4.10 to 4.67 4.10 to 4.42 4.09 to 4.43 3.79 to 4.26

Based on its current conservative gearing ratio, Atrium REIT is able to leverage on further borrowings to make opportunistic acquisitions that fits its investment criteria which will enhance the returns to unitholders, before reaching the 50% threshold under the REITs Guidelines.

distribution of income

Atrium REIT’s portfolio of properties has been consistently delivering stable and competitive rate of return to its unitholders since its listing in 2007. The total distribution paid and declared for the financial year under review is 8.25 sen per unit, totaling RM10,048,583, which translates to a yield of 7.50% based on the closing market price of RM1.10 as at 31 December 2015.

The financial statements for the current financial year do not reflect the final income distribution. Such income distribution will be accounted for in the statement of changes in net asset value as distribution to unitholders in the next financial year ending 31 December 2016.

The effect of the income distribution in terms of NAV per unit is as follows:

As at As at 31 december 31 december 2015 2014 rM rM nAv per unit - before distribution 1.4226 1.3834nAv per unit - after distribution 1.4096 1.3654

breakdown of unitholdings as at 31 december 2015

size of holdings no. of unitholders no. of units 5,000 and below 1,275 2,988,946 5,001 - 10,000 481 4,140,300 10,001 - 50,000 577 14,449,800 50,001 - 500,000 213 31,297,354 500,001 and above 24 68,924,600 totAl : 2,570 121,801,000

revaluation of investment Properties

The Manager carried out a year end revaluation of the Trust’s investment properties in compliance to Clause 10.03 of the REIT Guidelines and the Malaysian Financial Reporting Standard 140.

For FY 2015, the portfolio registered a fair value gain on the revaluation of investment properties amounting to RM4.29 million based on the appraised values conducted by independent registered valuers.

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33

investment of Atrium reit

Atrium REIT’s composition of investment as at 31 December 2015 is as follows:

rM Million % Atrium Shah Alam 1 79.00 33.40Atrium Shah Alam 2 63.00 26.63Atrium Puchong 48.50 20.50Atrium USJ 31.40 13.27 221.90 93.80Deposits with a licensed bank 14.65 6.20 236.55 100.00

Portfolio review

occupancy

100% 100%

73%

65%

29%

23%

14%

34%903,748 sq.ft

Portfolio composition

Atrium Shah Alam 1

Atrium Shah Alam 2Atrium Puchong

Atrium USJ

0%

Atrium Shah Alam 1

Atrium Shah Alam 2Atrium Puchong

Atrium USJ

For FY2015, Atrium REIT has a portfolio of four properties with a total net lettable area of 903,748 sq ft. pursuant to the successful disposal of Atrium Rawang. The disposal of Atrium Rawang to Chip Loong Shark’s Fin Seafood Sdn Bhd (Company No: 485507-U) for RM13,500,000 was completed on 30 April 2015, giving the Trust a gain of RM4,258,126. The latest market value of RM8,900,000 for Atrium Rawang was based on the value appraised by First Pacific Valuers Property Consultants, an independent firm of registered valuers in its valuation report dated 7 October 2014.

Atrium REIT’s gross revenue decreased from RM16,152,609 in FY2014 to RM12,867,216 in FY2015. The main reason for the decrease in the gross revenue is due to the loss of rental income as a result of the non-renewal of the expired tenancy by CEVA Logistics for Atrium Shah Alam 2 (“ASA2”) and rental void in Atrium Puchong (“AP”).

However, as at the date of this report, a new tenant has been secured for ASA2 and pending the execution of the tenancy agreement, the tenancy is expected to commence upon the completion of phase 1 of the AEI by second quarter of 2016 and the balance phase 2 AEI to be completed and the space to be handed over to the tenant by third quarter of 2016. As for AP, a tenant was secured to rent part of the warehouse for a period of 6 months since 1 October 2015. With the construction of the LRT project in the vicinity of AP coming to a completion, the road condition and the traffic congestion in the vicinity of AP are expected to improve. The Manager is confident that a new longer term tenant will be secured in the near future. Despite the challenging market conditions, the Manager successfully rented out part of AP, renewed the tenancy for Atrium USJ-Block B whilst the tenancy for Atrium Shah Alam 1 was extended by replacing DHL Properties (Malaysia) Sdn Bhd with a new tenant, Marelli Asia Pacific Sdn Bhd during the year under review. Atrium REIT experienced net positive rental reversions for all the tenancies renewed/extended in FY2015.

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review of the 2015 Property Market

overall economic overview The global economy continued to expand at a moderate pace in the third quarter of 2015, with diverging growth momentum across economies. While the US and the UK economies registered moderate growth, economic activity in the euro area and Japan improved at a more gradual pace. In Asia, growth was supported by the continued expansion of domestic demand amid weak export performance. Against a backdrop of moderate growth and low inflation, several major and regional central banks lowered policy rates. In addition, a number of economies in the region have also announced fiscal measures to support domestic demand activity.

The Malaysian economy recorded a growth of 4.7% in the third quarter of 2015 (2Q 2015: 4.9%), supported mainly by private sector demand. On the supply side, all economic sectors continued to expand during the quarter. On a quarter-on-quarter seasonally adjusted basis, the economy grew by 0.7% (2Q 2015: 1.1%). The private sector continued to be the key driver of growth during the quarter. Private investment grew by 5.5% (2Q 2015: 3.9%), driven by capital spending in the manufacturing and services sectors. Private consumption expanded at a more moderate rate of 4.1% (2Q 2015: 6.4%) as households continued to adjust to the implementation of the Goods and Services Tax (GST). Public investment turned around to record a positive growth due to the improvement in spending on fixed assets by both the Federal Government and public enterprises Meanwhile, public consumption growth moderated to 3.5% (2Q 2015: 6.8%) following the slower growth in both emoluments and supplies and services expenditure.

Going forward, global growth is expected to remain moderate if not slow. Concerns over various issues from the glut in crude oil to China’s slowing economy and whether central-banks stimulus efforts are losing their potency have stoked volatility in financial markets in 2016. Crude oil’s more than 40% slide over the past year has restrained growth in oil-rich emerging-market countries and heightened sensitivity to any sign of the main oil producing countries to coordinate production cuts. Gyrations in Chinese equities have spurred speculation over whether the nation’s central bank will step up efforts to restore stability to the currency and economy. After a tumultuous start to the year, U.S. stocks are staging their longest recovery as the domestic economy shows signs of improvement.

While the major advanced economies continue to improve, the pace of recovery will be modest. In Asia, domestic demand is expected to continue to support growth. Downside risks to global growth remain high arising from the moderating growth momentum in a number of major economies, uncertainty surrounding energy and commodity prices and possible disorderly market conditions arising from policy shifts in major economies. While downside risks to growth remain, the Malaysian economy is expected to expand within the region of 4.0 – 5.0% in 2016. As a result of structural adjustments that have been steadily undertaken over the years, the economy is now supported by diversified sources of growth. With the external sector performance expected to be modest, domestic demand will continue to be the main driver of growth, supported mainly by the private sector activity. In addition, the flexible exchange rate, deep and more mature financial markets and solid financial institutions will support this trend and ensure that shocks such as volatile capital flows are well intermediated, therefore minimising spillovers to the real economy.

overall Property Market outlook

In spite of the challenging economic and financial environment facing the country in the past months, for H1 2015, the property market registered 186,661 transactions with a value of RM76.61 billion, down by 3.5% in volume and 6.6% in value against H1 2014. Residential sector continued to lead the overall market, contributing 64.1% in volume and 47.5% in value. However, the residential sector recorded a slight downturn by 2.6% in volume and correspondingly down in value by 9.7% whilst the commercial and industrial sector registered an increase in volume by 1.6% and 4.7% respectively.

The outlook for the property market in 2016 is expected to be challenging as the performance of the property market is expected to be affected by interrelated factors namely economic, financial and business and consumers’ confidence at large. However, given the inelasticity nature of the property market, any impact on the property market as a result of the changes in the interrelated factors will be more gradual, unlike the stock market which will be immediate.

industrial Property sector highlights and outlook

The industrial sub-sector recorded an improvement in market activity after three consecutive years of downtrend. The market recorded 4,118 transactions worth RM6.96 billion, up by 4.7% in volume and 1.4% in value. Selangor continued to dominate the market, with 27.6% of the nation’s volume, followed by Johor and Penang, each with 16.6% and 10.4% market share respectively.

Penang and Johor both led the market with significant increase attributed to the bulk transfers of vacant plots both in Taman Machang Indah in Seberang Perai Tengah and in Perindustrian Pontian Maju in Johor. By type, terraced factory (30.0%) and vacant plots (28.6%) formed the larger portion of the industrial property transaction.

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industrial Property sector highlights and outlook (continued)

Prices of industrial property remained stable in most areas with premium prices recorded in prime areas of Petaling (Puchong, Damansara and Shah Alam), Johor and Penang. One and a-half storey terraced factories recorded significant increase in Puchong locality with prices ranging from RM1.05 million to RM1.60 million. Double storey semi-detached in Temasya Industrial Park in Shah Alam fetched RM10.0 million, up by 10.0% whilst three storey semi-detached in Kota Damansara recorded a 15.2% premium at RM7.0 million. In Johor, one of the two better performed states, properties in selected areas recorded increment and fetched competitive prices whilst property prices in Penang were stable with higher range recorded in strategic locations. (source: Property Market Report First Half 2015, National Property Information Centre)

The Klang Valley industrial market is expected to remain stable despite the expected challenging economic environment due to the resilient domestic demand. Prices and rentals of industrial properties in prime and strategic areas with good accessibilities and infrastructure are expected to remain stable due to limited supply.

directors of the Manager

The names of the Directors of the Manager who served on the Board since the date of last report are:

Dato’ Dr Ir Mohamad Khir Bin Harun (Chairman) Wong Sui Ee Tor Peng Sie How Hu Son Soong Kwong Heng

directors’ benefits

During and at the end of the financial year, no arrangement subsisted to which the Manager is a party with the object or objects of enabling the Directors to acquire benefits by means of acquisition of units in or debentures of Atrium REIT or any other body corporate.

Since the establishment of the Trust, no Director has received or become entitled to receive any benefits by reason of a contract made by the Manager for Atrium REIT or a related corporation with any Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest, except as disclosed in the notes to the financial statements.

directors’ interests

According to the register of Directors’ unitholdings in Atrium REIT, the interests of Directors of the Manager in office at the end of the financial year ended 31 December 2015 are as follows:

At bought sold At 1 january 31 december 2015 2015direct interest Dato’ Dr Ir Mohamad Khir Bin Harun - - - -Wong Sui Ee 363,000 - - 363,000Tor Peng Sie 100,000 - - 100,000How Hu Son 100,000 - - 100,000Soong Kwong Heng 55,000 - - 55,000

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36

Manager’s fees And commission

Pursuant to the Deed, for the financial year ended 31 December 2015, the Manager received a fee of 0.8% per annum of the Net Asset Value of the Trust eventhough the Manager is entitled to a fee of up to 1.0% per annum of the Net Asset Value of the Trust.

During the year, the Manager did not receive any soft commission (i.e. goods and services) from brokers or agents by virtue of transactions conducted by Atrium REIT.

other statutory information

Before the Statement of Profit and Loss and Other Comprehensive Income and Statement of Financial Position of the Trust were made out, the Manager took reasonable steps:

(i) to ascertain that proper action has been taken in relation to the writing off of bad debts and the making of provision for doubtful debts andsatisfiedthemselvesthattherewerenoknownbaddebtsandthatnoprovisionfordoubtfuldebtswasnecessary;and

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business have been written down to an amount which they might be expected so to realise.

At the date of this report, the Manager is not aware of any circumstances which would render:

(i) itnecessarytowriteoffanybaddebtsortomakeanyprovisionfordoubtfuldebtsinrespectofthefinancialstatementsoftheTrust;and

(ii) the values attributed to the current assets in the financial statements of the Trust misleading.

At the date of this report, the Manager is not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Trust misleading or inappropriate.

At the date of this report, the Manager is not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Trust which would render any amount stated in the financial statements misleading.

At the date of this report, there does not exist:

(i) anychargeontheassetsoftheTrustwhichhasarisensincetheendofthefinancialyearwhichsecurestheliabilityofanyotherperson;or

(ii) any contingent liability of the Trust which has arisen since the end of the financial year.

In the opinion of the Directors of the Manager:

(i) the results of the operations of Atrium REIT during the financial year were not substantially affected by any item, transaction or event of amaterialandunusualnature;and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Trust for the financial year in which this report is made.

Signed on behalf of the Board in accordance with a resolution of the Directors of the Manager.

..................................................... ....................................................dato’ dr ir Mohamad Khir bin harun Wong sui ee

Kuala Lumpur, MalaysiaDate: 19 February 2016

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In the opinion of the Directors of Atrium REIT Managers Sdn. Bhd. (“the Manager”), the financial statements set out on pages 40 to 72 have been drawn up in accordance with the provisions of the Trust Deed dated 20 November 2006 and the Supplementary Trust Deed dated 25 November 2008, the Securities Commission’s Guidelines on Real Estate Investment Trusts, applicable securities laws, Malaysian Financial Reporting Standards and International Financial Reporting Standards so as to give a true and fair view of the financial position of Atrium Real Estate Investment Trust (“Atrium REIT” or “Trust”) as at 31 December 2015 and of the financial performance and cash flows of the Trust for the financial year then ended.

In the opinion of the Directors of the Manager, the information set out in Note 31 to the financial statements on page 73 has been compiled in accordance with the Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, issued by the Malaysian Institute of Accountants, and presented based on the format prescribed by Bursa Malaysia Securities Berhad.

On behalf of the Manager,

Atrium REIT Managers Sdn. Bhd.in accordance with a resolution of the Directors of the Manager

.................................................. ......................................................Wong sui ee dato’ dr. ir. Mohamad Khir bin harun

Kuala Lumpur19 February 2016

I, Wong Sui Ee, being the Director of the Manager, Atrium REIT Managers Sdn. Bhd. primarily responsible for the financial management of Atrium Real Estate Investment Trust, do solemnly and sincerely declare that the financial statements set out on pages 40 to 73 are, to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly )declared by the abovenamed at )Kuala Lumpur in the Federal )Territory this )19 February 2016 )

................................................Wong Sui Ee

Before me:-

Commissioner for Oaths

Statement by Directors of the Manager

Statutory Declaration


38

trustee’s rePort

We, CIMB Commerce Trustee Berhad, have acted as Trustee of Atrium Real Estate Investment Trust (“Atrium REIT” or “Trust”) for the financial year ended 31 December 2015. In our opinion and to the best of our knowledge:

a) Atrium REIT Managers Sdn. Bhd. (“the Manager”) has managed Atrium REIT in accordance with the limitations imposed on the investment powers of the Manager and the Trustee under the Trust Deed dated 20 November 2006 and the Supplementary Trust Deed dated 25 November 2008 (collectively referred to as the “Deed”), the Securities Commission’s Guidelines on Real Estate Investment Trusts, the Capital Markets and Services Act 2007 (as amended from time to time) and other applicable laws for the financial year ended31December2015;

b) the procedures and processes employed by the Manager to value and price the units of Atrium REIT are adequate and that such valuation/pricingiscarriedoutinaccordancewiththeDeedandotherregulatoryrequirements;and

We also confirm that the income distributions declared and paid during the financial year ended 31 December 2015 are in line with and are reflective of the objectives of Atrium REIT. Distributions that have been paid or proposed for the financial year ended 31 December 2015 are as follows:

1) First interim income distribution of 1.70 sen paid on 29 May 2015.2) Second interim income distribution of 3.60 sen paid on 11 September 2015.3) Third interim income distribution of 1.65 sen paid on 27 November 2015.4) Proposed fourth and final income distribution of 1.30 sen payable on 29 February 2016.

For and on behalf of the Trustee,CIMB Commerce Trustee Berhad (Company No. 313031-A)

.............................................lee Kooi yokeChief Operating Officer

Kuala Lumpur, Malaysia19 February 2016

Trustee’s Report

Annual Report 2015

39

report on the financial statements

We have audited the financial statements of Atrium Real Estate Investment Trust (“Atrium REIT” or “Trust”), which comprise the statement of financial position as at 31 December 2015 of Atrium REIT, and statement of profit or loss and other comprehensive income, statement of changes in net asset value and statement of cash flows of Atrium REIT for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 40 to 72.

directors of Atrium reit Managers sdn. bhd.’s responsibility for the financial statements

The Directors of Atrium REIT Managers Sdn. Bhd. (“the Manager”) of Atrium REIT are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Directors of the Manager are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to Atrium REIT’s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Atrium REIT’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors of the Manager, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

opinion

In our opinion, the financial statements give a true and fair view of the financial position of Atrium REIT as of 31 December 2015 and of its financial performance and cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards.

other reporting responsibilities

The supplementary information set out in Note 31 to the financial statements is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The Directors of the Manager are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

other Matters

This report is made solely to the unitholders of Atrium REIT, as a body and for no other purpose. We do not assume responsibility to any other person for the content of this report.

bdo ng soe KeiAF : 0206 2982/08/17 (J)Chartered Accountants Chartered Accountant


Independent Auditors’ Report to the Unitholders Of Atrium Real Estate Investment Trust


40

2015 2014 note rM rM

Assets non-current assets Investment properties 7 221,900,000 217,300,000 current assets Trade and other receivables 8 1,991,328 1,769,216 Current tax assets 112,423 - Deposits with a licensed bank 9 14,649,240 13,094,807 Cash and bank balances 143,445 267,338 16,896,436 15,131,361 Non-current asset held for sale 10 - 8,900,000 totAl Assets 238,796,436 241,331,361 liAbilities non-current liabilities Trade and other payables 11 3,321,551 2,190,316 Borrowings 12 20,000,000 20,000,000 23,321,551 22,190,316current liabilities Trade and other payables 11 2,602,563 5,635,802 Borrowings 12 39,600,000 45,000,000 42,202,563 50,635,802 totAl liAbilities 65,524,114 72,826,118 net Asset vAlue (“nAv”) 173,272,322 168,505,243 finAnced by: unitholders’ funds Unitholders’ capital 13 119,351,580 119,351,580 Undistributed income 53,920,742 49,153,663 totAl unitholders’ funds 173,272,322 168,505,243 nuMber of units in circulAtion (units) 13 121,801,000 121,801,000 nAv Per unit (rM) - Before income distribution 1.4226 1.3834- After income distribution 1.4096 1.3654

The accompanying notes form an integral part of these financial statements.

Statement Of Financial PositionAs at 31 December 2015

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41


Gross revenue 15 12,867,216 16,152,609Property operating expenses 16 (1,933,862) (1,866,352) net rental income 10,933,354 14,286,257Interest income 556,197 425,966Changes in fair value of investment properties 7 4,291,163 4,500,000Gain on disposal of an investment property 4,258,126 -Other income 1,057,289 58,800 total income 21,096,129 19,271,023 trust expenses Manager’s fees 17 (1,355,407) (1,310,814) Trustee’s fees 18 (110,127) (106,504) Auditors’ fee (23,000) (21,000) Tax agent’s fee (5,800) (5,000) Finance costs 19 (2,712,302) (2,809,681) Valuation fees (40,000) (63,500) Administrative expenses (1,247,180) (130,818) Others (20,069) (1,100) total expenses (5,513,885) (4,448,417) net income before tax 15,582,244 14,822,606Tax expense 20 (157,577) - net income for the financial year 15,424,667 14,822,606 other comprehensive income, net of tax - - total comprehensive income 15,424,667 14,822,606 net income for the financial year is made up as follows: Realised 11,133,504 10,322,606Unrealised - changes in fair value of investment properties 4,291,163 4,500,000 15,424,667 14,822,606 earnings per unit (sen) 21 - Before Manager’s fees 13.78 13.24- After Manager’s fees 12.66 12.17


Statement of Profit or Loss and Other Comprehensive Incomefor the Financial Year ended 31 December 2015


42


net income distributions* 22 - First interim income distribution of 1.70 sen paid on 29 May 2015 (2014: 2.20 sen paid on 30 May 2014) 2,070,617 2,679,622- Second interim income distribution of 3.60 sen paid on 11 September 2015 (2014: 2.20 sen paid on 29 August 2014) 4,384,836 2,679,622- Third interim income distribution of 1.65 sen paid on 27 November 2015 (2014: 2.20 sen paid on 28 November 2014) 2,009,717 2,679,622- Proposed final income distribution of 1.30 sen payable on 29 February 2016 (2014: 1.80 sen paid on 27 February 2015) 1,583,413 2,192,418 10,048,583 10,231,284 income distribution per unit* - First interim income distribution 1.70 2.20- Second interim income distribution 3.60 2.20- Third interim income distribution 1.65 2.20- Proposed final income distribution 1.30 1.80 8.25 8.40

* Withholding tax will be deducted for distributions made for the following categories of unitholders:

Withholding tax rate 2015 2014 Resident corporate Nil^ Nil^Resident non-corporate 10% 10%Non-resident individual 10% 10%Non-resident corporate 25% 25%Non-resident institutional 10% 10%

^Nowithholdingtax;taxatprevailingtaxrate


Statement of Profit or Loss and Other Comprehensive Incomefor the Financial Year ended 31 December 2015

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43

--- undistributed income --- unitholders’ unitholders’ capital realised unrealised fund rM rM rM rM At 1 january 2015 119,351,580 2,753,663 46,400,000 168,505,243 operations for the financial year ended 31 december 2015 Net income for the financial year - 11,133,504 4,291,163 15,424,667Realisation of unrealised loss upon disposal of an investment property - (1,100,000) 1,100,000 -Other comprehensive income, net of tax - - - - Total comprehensive income - 10,033,504 5,391,163 15,424,667 unitholders’ transactions Distributions to unitholders: - 2015 interim - (8,465,170) - (8,465,170)- 2014 final - (2,192,418) - (2,192,418) Decrease in net assets resulting from unitholders’ transactions - (10,657,588) - (10,657,588) At 31 december 2015 119,351,580 2,129,579 51,791,163 173,272,322

At 1 january 2014 119,351,580 3,149,545 41,900,000 164,401,125 operations for the financial year ended 31 december 2014 Net income for the financial year - 10,322,606 4,500,000 14,822,606Other comprehensive income, net of tax - - - - Total comprehensive income - 10,322,606 4,500,000 14,822,606 unitholders’ transactions Distributions to unitholders: - 2014 interim - (8,038,866) - (8,038,866)- 2013 final - (2,679,622) - (2,679,622) Decrease in net assets resulting from unitholders’ transactions - (10,718,488) - (10,718,488) At 31 december 2014 119,351,580 2,753,663 46,400,000 168,505,243


Statement of Changes in Net Asset Value


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cAsh floWs froM oPerAting Activities Net income before tax 15,582,244 14,822,606 Adjustments for: Changes in fair value of investment properties 7 (4,291,163) (4,500,000)Finance costs 19 2,712,302 2,809,681Gain on disposal of an investment property (4,258,126) -Interest income (556,197) (425,966) Operating income before changes in working capital 9,189,060 12,706,321 Increase in trade and other receivables (563,986) (813,918)(Decrease)/Increase in trade and other payables (1,902,004) 1,800,805 Cash generated from operations 6,723,070 13,693,208 Tax paid (270,000) - Net cash from operating activities 6,453,070 13,693,208 cAsh floWs froM investing Activities Enhancement of an investment property (308,837) -Interest received 556,197 425,966Proceeds from disposal of an investment property 13,500,000 - Net cash from investing activities 13,747,360 425,966 cAsh floWs froM finAncing Activities Interest paid 19 (2,712,302) (2,809,681)Repayments of Short Term Revolving Credit (5,400,000) -Distributions paid to unitholders - Current year (8,465,170) (8,038,866)- Previous year (2,192,418) (2,679,622) Net cash used in financing activities (18,769,890) (13,528,169) Net increase in cash and cash equivalents 1,430,540 591,005 Cash and cash equivalents at beginning of financial year 13,362,145 12,771,140 Cash and cash equivalents at end of financial year 14,792,685 13,362,145 cAsh And cAsh eQuivAlents Cash and cash equivalents included in the statement of cash flows comprise the following amounts in the statement of financial position:

Deposits with a licensed bank (not more than three months) 14,649,240 13,094,807Cash and bank balances 143,445 267,338 14,792,685 13,362,145


Statement of Cash Flowsfor the Financial Year ended 31 December 2015

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1. corporate information

Atrium Real Estate Investment Trust (‘Atrium REIT’ or ‘Trust’) is a Malaysia-domiciled real estate investment trust constituted pursuant to the Trust Deed dated 20 November 2006 and the Supplementary Trust Deed dated 25 November 2008 (collectively referred to as the “Deed”) between Atrium REIT Managers Sdn. Bhd. (‘the Manager’) and CIMB Commerce Trustee Berhad (‘Trustee’). Atrium REIT is listed on the Main Market of Bursa Malaysia Securities Berhad.

The registered office of Atrium REIT is located at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No 8, Jalan Kerinchi, 59200 Kuala Lumpur.

The principal place of business of the Trust is located at 36-2, Jalan 5/101C, Off Jalan Kaskas, Jalan Cheras, 56100 Kuala Lumpur.

The principal activity of Atrium REIT is investment in real estate and real estate-related assets used whether directly or indirectly through the ownership of single-purpose companies which wholly own real estate. There has been no significant change in the nature of this activity during the financial year.

The financial statements are presented in Ringgit Malaysia (‘RM’), which is also the functional currency of the Trust.

The financial statements were authorised for issue in accordance with a resolution by the Board of Directors of the Manager, Atrium REIT Managers Sdn. Bhd., on 19 February 2016.

2. term of the trust

Atrium REIT will continue its operations until such time as determined by the Trustee and the Manager as provided under the provisions of Clause 19 of the Trust Deed dated 20 November 2006.

3. basis of Preparation

3.1 statement of compliance

The financial statements of Atrium REIT set out on pages 40 to 72 have been prepared in accordance with Malaysian Financial Reporting Standards (‘MFRSs’) and International Financial Reporting Standards (‘IFRSs’).

However, Note 31 to the financial statements set out on page 73 has been prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (‘MIA Guidance’) and the directive of Bursa Malaysia Securities Berhad.

4. significant Accounting Policies

4.1 basis of accounting

The financial statements of Atrium REIT have been prepared under the historical cost convention except as otherwise stated in the financial statements.

The preparation of financial statements in conformity with MFRSs requires the Directors of the Manager to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and contingent liabilities. In addition, the Directors of the Manager are also required to exercise their judgement in the process of applying the accounting policies. The areas involving such judgements, estimates and assumptions are disclosed in Note 6 to the financial statements. Although these estimates and assumptions are based on the Directors of the Manager’s best knowledge of events and actions, actual results could differ from those estimates.

Notes to the Financial Statements


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4. significant Accounting Policies (continued)

4.2 investment properties

Investment properties are properties which are held to earn rental yields or for capital appreciation or for both and are not occupied by the Trust. Investment properties are initially measured at cost, which includes transaction costs. After initial recognition, investment properties are stated at fair value.

The fair value of investment properties reflects among other things, rental income from current leases and other assumptions that market participants would use when pricing the investment properties under current market conditions.

Fair values of investment properties are based on valuations by registered independent valuers with appropriate recognised professional qualification and has recent experience in the location and category of the investment properties being valued.

A gain or loss arising from a change in the fair value of investment properties is recognised in profit or loss for the period in which it arises.

Investment properties are derecognised when either they have been disposed off or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The gains or losses arising from the retirement or disposal of investment property is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset and is recognised in profit or loss in the period of the retirement or disposal.

4.3 leases

Operating leases

A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership. Assets leased out under operating lease are presented on the statement of financial position according to the nature of the assets.

Lease payments under operating leases are recognised as an expense on a straight-line basis over the lease term.

4.4 financial instruments

A financial instrument is any contract that gives rise to a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.

A financial asset is any asset that is cash, an equity instrument of another enterprise, a contractual right to receive cash or another financial asset from another enterprise, or a contractual right to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially favourable to the Trust.

A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise, or a contractual obligation to exchange financial assets or financial liabilities with another enterprise under conditions that are potentially unfavourable to the Trust.

Financial instruments are recognised on the statement of financial position when the Trust has become a party to the contractual provisions of the instrument. At initial recognition, a financial instrument is recognised at fair value plus, in the case of a financial instrument not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issuance of the financial instrument.

An embedded derivative is separated from the host contract and accounted for as a derivative if, and only if the economic characteristics and risks of the embedded derivative is not closely related to the economic characteristics and risks of the host contract, a separate instrument with the same terms as the embedded derivative meets the definition of a derivative, and the hybrid instrument is not measured at fair value through profit or loss.


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4.4 financial instruments (continued)

(a) Financial assets

A financial asset is classified into the following four (4) categories after initial recognition for the purpose of subsequent measurement:

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss comprise financial assets that are held for trading (i.e. financial assets acquired principally for the purpose of resale in the near term), derivatives (both, freestanding and embedded) and financial assets that were specifically designated into this classification upon initial recognition.

Subsequent to initial recognition, financial asset classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial asset classified as at fair value through profit or loss are recognised in profit or loss. Net gains or losses on financial asset classified as at fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such items are recognised separately in profit or loss as components of other income or other operating losses.

However, derivatives that are linked to and must be settled by delivery of unquoted equity instruments that do not have a quoted market price in an active market are recognised at cost.

(ii) Held-to-maturity investments

Financial assets classified as held-to-maturity comprise non-derivative financial assets with fixed or determinable payments and fixed maturity that the Trust has the positive intention and ability to hold to maturity.

Subsequent to initial recognition, financial assets classified as held-to-maturity are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as held-to-maturity are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process.

(iii) Loans and receivables

Financial assets classified as loans and receivables comprise non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

Subsequent to initial recognition, financial assets classified as loans and receivables are measured at amortised cost using the effective interest method. Gains or losses on financial assets classified as loan and receivables are recognised in profit or loss when the financial assets are derecognised or impaired, and through the amortisation process.

(iv) Available-for-sale financial assets

Financial assets classified as available-for-sale comprise non-derivative financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss.

Subsequent to initial recognition, financial assets classified as available-for-sale are measured at fair value. Any gains or losses arising from changes in the fair value of financial assets classified as available-for-sale are recognised directly in other comprehensive income, except for impairment losses and foreign exchange gains and losses, until the financial asset is derecognised, at which time the cumulative gains or losses previously recognised in other comprehensive income are recognised in profit or loss. However, interest calculated using the effective interest method is recognised in profit or loss whilst dividends on available-for-sale equity instruments are recognised in profit or loss when the Trust’s right to receive payment is established.



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(a) Financial assets (continued)

Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in fair value with original maturities of three (3) months or less, and are used by the Trust in the management of its short term commitments. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts.

A financial asset is derecognised when the contractual right to receive cash flows from the financial asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of consideration received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss that had been recognised directly in other comprehensive income shall be recognised in profit or loss.

A regular way purchase or sale is a purchase or sale of a financial asset under a contract whose terms require delivery of the asset within the time frame established generally by regulation or marketplace convention.

A regular way purchase or sale of financial assets shall be recognised and derecognised, as applicable, using trade date accounting.

(b) Financial liabilities

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. A financial liability is classified into the following two (2) categories after initial recognition for the purpose of subsequent measurement:

(i) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss comprise financial liabilities that are held for trading, derivatives (both, freestanding and embedded) and financial liabilities that were specifically designated into this classification upon initial recognition.

Subsequent to initial recognition, financial liabilities classified as at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in the fair value of financial liabilities classified as at fair value through profit or loss are recognised in profit or loss. Net gains or losses on financial liabilities classified as at fair value through profit or loss exclude foreign exchange gains and losses, interest and dividend income. Such items are recognised separately in profit or loss as components of other income or other operating losses.

(ii) Other financial liabilities

Financial liabilities classified as other financial liabilities comprise non-derivative financial liabilities that are neither held for trading nor initially designated as at fair value through profit or loss.

Subsequent to initial recognition, other financial liabilities are measured at amortised cost using the effective interest method. Gains or losses on other financial liabilities are recognised in profit or loss when the financial liabilities are derecognised and through the amortisation process.


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(b) Financial liabilities (continued)

A financial liability is derecognised when, and only when, it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expires. An exchange between an existing borrower and lender of debt instruments with substantially different terms are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

Any difference between the carrying amount of a financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

4.5 impairment of financial assets

The Trust assesses whether there is any objective evidence that a financial asset is impaired at the end of each reporting period.

Loans and receivables

The Trust collectively considers factors such as the probability of bankruptcy or significant financial difficulties of the receivable, and default or significant delay in payments by the receivable to determine whether there is objective evidence that an impairment loss on loans and receivables has occurred. Other objective evidence of impairment include historical collection rates determined on an individual basis and observable changes in national or local economic conditions that are directly correlated with the historical default rates of receivables.

If any such objective evidence exists, the amount of impairment loss is measured as the difference between the financial asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

The carrying amount of loans and receivables are reduced through the use of an allowance account.

If in a subsequent period, the amount of the impairment loss decreases and it objectively relates to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of impairment reversed is recognised in profit or loss.

4.6 income taxes

Income taxes include all taxes on taxable income. Income taxes also include real property gains taxes payable on disposal of properties.

Taxes in the statement of profit or loss and other comprehensive income comprise current tax and deferred tax.

(a) Current tax

Current tax is the amount of income taxes payable or receivable in respect of the taxable income or loss for a period.

Current tax for the current and prior periods is measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that have been enacted or substantively enacted by end of each reporting period.



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4.6 income taxes (continued)

(b) Deferred tax

Deferred tax is recognised in full using the liability method on temporary differences arising between the carrying amount of an asset or liability in the statement of financial position and its tax base.

Deferred tax is recognised for all temporary differences, unless the deferred tax arises from goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of transaction, affects neither accounting income nor taxable income.

A deferred tax asset is recognised only to the extent that it is probable that future taxable income would be available against which the deductible temporary differences can be utilised. The carrying amount of a deferred tax asset is reviewed at the end of each reporting period. If it is no longer probable that sufficient taxable income would be available to allow the benefit of part or all of that deferred tax asset to be utilised, the carrying amount of the deferred tax asset would be reduced accordingly. When it becomes probable that sufficient taxable income would be available, such reductions would be reversed to the extent of the taxable income.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority on either:

(i) thesametaxableentity;or(ii) different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise

the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax would be recognised as income or expense and included in the profit or loss for the period unless the tax relates to items that are credited or charged, in the same or a different period, directly to equity, in which case the deferred tax would be charged or credited directly to equity.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on the announcement of tax rates and tax laws by the Government in the annual budgets which have the substantive effect of actual enactment by the end of each reporting period.

Where investment properties are carried at fair value in accordance with the accounting policy set out in Note 4.2 to the financial statements, the amount of deferred tax recognised is measured using the tax rates that would apply on the sale of those assets at their carrying values at the reporting date unless the property is depreciable and is held with the objective to consume substantially all the economic benefits embodied in the property over time, rather than through sale.

4.7 Provisions

Provisions are recognised when there is a present obligation, legal or constructive, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits would be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, the amount of a provision would be discounted to its present value at a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the liability.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits would be required to settle the obligation, the provision would be reversed.

Provisions are not recognised for future operating losses. If the Trust has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.


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4.8 contingent liabilities and contingent assets

A contingent liability is a possible obligation that arises from past events whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Trust or a present obligation that is not recognised because it is not probable that an outflow of resources would be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognised because it cannot be measured reliably. The Trust does not recognise a contingent liability but discloses its existence in the financial statements.

A contingent asset is a possible asset that arises from past events whose existence would be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Trust. The Trust does not recognise contingent assets but disclose its existence where inflows of economic benefits are probable, but not virtually certain.

4.9 revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, net of discounts and rebates.

Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction would flow to the Trust, and the amount of revenue and the cost incurred or to be incurred in respect of the transaction can be reliably measured and specific recognition criteria have been met for each of the activities of the Trust as follows:

(a) rental income

Rental income is accounted for on a straight line basis over the lease term of an ongoing lease. The aggregate cost of incentives provided to the lessee is recognised as reduction of rental income over the lease term on a straight line basis.

(b) interest income

Interest income is recognised as it accrues, using the effective interest method.

4.10 expenses

(a) Property operating expenses

Property operating expenses consist of property management fees, quit rent, assessment and other outgoings in relation to investment properties where such expenses are the responsibility of the Trust. Property management fees are recognised on an accrual basis.

(b) borrowing costs

Borrowing cost is recognised in profit or loss in the period in which they are incurred.

(c) Manager’s fees

The Manager’s fees are recognised on an accrual basis using the applicable formula as stated in Note 17 to the financial statements.

(d) trustee’s fees

The Trustee’s fees are recognised on an accrual basis using the applicable formula as stated in Note 18 to the financial statements.



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4.11 fair value measurements

The fair value of an asset or a liability is determined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market or in the absence of a principal market, in the most advantageous market.

The Trust measures the fair value of an asset or a liability by taking into account the characteristics of the asset or liability if market participants would take these characteristics into account when pricing the asset or liability. The Trust has considered the following characteristics when determining fair value: (a) theconditionandlocationoftheasset;and(b) restrictions, if any, on the sale or use of the asset.

The fair value measurement for a non-financial asset takes into account the ability of the market participant to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Trust uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

The fair value of a financial or non-financial liability or an entity’s own equity instrument assumes that:(a) a liability would remain outstanding and the market participant transferee would be required to fulfil the obligation. The

liabilitywouldnotbesettledwiththecounterpartyorotherwiseextinguishedonthemeasurementdate;and(b) an entity’s own equity instrument would remain outstanding and the market participant transferee would take on the rights

and responsibilities associated with the instrument. The instrument would not be cancelled or otherwise extinguished on the measurement date.

4.12 non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amounts would be recovered principally through a sale transaction rather than through continuing use. For this to be the case, the assets shall be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets and its sale must be highly probable. The probability of unitholders’ approval (if required in the jurisdiction) is considered as part of the assessment of whether the sale is highly probable.

The sale is expected to qualify for recognition as a completed sale within one (1) year from the date of classification. However,

an extension of the period required to complete the sale does not preclude the assets from being classified as held for sale if the delay is caused by events or circumstances beyond the control of the Trust and there is sufficient evidence that the Trust remains committed to its plan to sell the assets.

Immediately before the initial classification as held for sale, the carrying amounts of the assets are measured in accordance with applicable MFRSs. On initial classification as held for sale, non-current assets (other than investment properties and financial assets carried at fair value) are measured at the lower of its carrying amount before the initial classification as held for sale and fair value less costs to sell. The differences, if any, are recognised in profit or loss as impairment loss.

The Trust measures a non-current asset classified as held for distribution to unitholders at the lower of its carrying amount and fair value less costs to distribute.

Non-current assets held for sale are classified as current assets in the statement of financial position and are stated at the lower of carrying amount immediately before initial classification and fair value less costs to sell. Any cumulative income or expense recognised directly in equity relating to the non-current asset classified as held for sale is presented separately.

If the Trust has classified an asset as held for sale but subsequently, the criteria for classification is no longer met, the Trust ceases to classify the asset as held for sale. The Trust measures a non-current asset that ceases to be classified as held for sale at the lower of:

(i) its carrying amount before the asset was classified as held for sale, adjusted for any revaluations that would have been recognisedhadtheassetnotbeenclassifiedasheldforsale;and

(ii) its recoverable amount at the date of the subsequent decision not to sell.


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5. Adoption of new Mfrss and Amendment to Mfrss

5.1 new Mfrss adopted during the financial year The Trust adopted the following Standards of the MFRS Framework that were issued by the Malaysian Accounting Standards

Board (‘MASB’) during the financial year.

title effective date

Amendments to MFRS 119 Defined Benefit Plans: Employee Contributions 1 July 2014Amendments to MFRSs Annual Improvements 2010 – 2012 Cycle 1 July 2014Amendments to MFRSs Annual Improvements 2011 – 2013 Cycle 1 July 2014

(a) Amendments to MFRS 119 Defined Benefit Plans: Employee Contributions are mandatory for annual periods beginning on or after 1 July 2014.

These Amendments provide a practical expedient in accounting for contributions from employees or third parties to defined benefit plans.

There is no material impact upon the adoption of these Amendments during the financial year.

(b) Amendments to MFRSs Annual Improvements 2010 – 2012 Cycle are mandatory for annual periods beginning on or after 1 July 2014.

Amendments to MFRS 2 Share-based Payment clarify the definition of ‘vesting conditions’ by separately defining ‘performance condition’ and ‘service condition’ to ensure consistent classification of conditions attached to a share-based payment.

Amendments to MFRS 3 Business Combinations clarify that when contingent consideration meets the definition of financial instrument, its classification as a liability or equity is determined by reference to MFRS 132 Financial Instruments: Presentation. The Amendments also clarify that contingent consideration classified as an asset or a liability shall be subsequently measured at fair value at each reporting date and changes in fair value shall be recognised in profit or loss.

Amendments to MFRS 8 Operating Segments require the disclosure of judgements made in applying the aggregation criteria to operating segments. This includes a brief description of the operating segments that have been aggregated and the economic indicators that have been assessed in determining that the aggregated operating segments share similar economic characteristics. The Amendments also clarify that reconciliation of the total reportable segments’ assets to the entity’s assets is required if that amount is regularly provided to the chief operating decision maker.

Amendments to MFRS 13 Fair Value Measurement relates to the Basis for Conclusions which is not an integral part of the Standard. The Basis for Conclusions clarify that short-term receivables and payables with no stated interest rates could be held at invoice amounts when the effect of discounting is immaterial.

Amendments to MFRS 116 Property, Plant and Equipment and MFRS 138 Intangible Assets clarify the accounting for accumulated depreciation or amortisation when an asset is revalued. It clarifies that the gross carrying amount is adjusted in a manner that is consistent with the revaluation of the carrying amount of the asset and the accumulated depreciation or amortisation is calculated as the difference between the gross carrying amount and the carrying amount of the asset after taking into account accumulated impairment losses.

Amendments to MFRS 124 Related Party Disclosures extends the definition of ‘related party’ to include an entity, or any member of a group of which it is a part, that provides key management personnel services to the reporting entity or to the parent of the reporting entity.




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5. Adoption of new Mfrss and Amendment to Mfrss (continued)

5.1 new Mfrss adopted during the financial year (continued)

(c) Amendments to MFRSs Annual Improvements 2011 – 2013 Cycle are mandatory for annual periods beginning on or after 1 July 2014.

Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards relates to the Basis for Conclusions which is not an integral part of the Standard. The Basis for Conclusions clarify that a first-time adopter is permitted but not required to apply a new or revised Standard that is not yet mandatory but is available for early application.

Amendments to MFRS 3 Business Combinations clarify that MFRS 3 excludes from its scope the accounting for the formation of all types of joint arrangements (as defined in MFRS 11 Joint Arrangements) in the financial statements of the joint arrangement itself, but not to the parties to the joint arrangement for their interests in the joint arrangement.

Amendments to MFRS 13 Fair Value Measurement clarify that the scope of the portfolio exception of MFRS 13 includes all contracts accounted for within the scope of MFRS 139 Financial Instruments: Recognition and Measurement or MFRS 9 Financial Instruments, regardless of whether they meet the definition of financial assets or financial liabilities as defined in MFRS 132 Financial Instruments: Presentation.

Amendments to MFRS 140 Investment Property clarify that the determination of whether an acquisition of investment property meets the definition of both a business combination as defined in MFRS 3 and investment property as defined in MFRS 140 requires the separate application of both Standards independently of each other.


5.2 new Mfrss that have been issued, but only effective for annual periods beginning on or after 1 january 2016

The following are Standards of the MFRS Framework that have been issued by the Malaysian Accounting Standards Board (‘MASB’) but have not been early adopted by the Trust.

title effective dateMFRS 14 Regulatory Deferral Accounts 1 January 2016Amendments to MFRS 10, MFRS 12 and MFRS 128 Investment Entities: Applying the

Consolidation Exception1 January 2016

Amendments to MFRS 101 Disclosure Initiative 1 January 2016Amendments to MFRS 116 and MFRS 138 Clarification of Acceptable Methods of

Depreciation and Amortisation1 January 2016

Amendments to MFRS 11 Accounting for Acquisitions of Interests in Joint Operations 1 January 2016Amendments to MFRS 116 and MFRS 141 Agriculture: Bearer Plants 1 January 2016Amendments to MFRS 127 Equity Method in Separate Financial Statements 1 January 2016Amendments to MFRSs Annual Improvements to 2012-2014 Cycle 1 January 2016MFRS 9 Financial Instruments (IFRS as issued by IASB in July 2014) 1 January 2018MFRS 15 Revenue from Contracts with Customers 1 January 2018Amendments to MFRS 10 and MFRS 128 Sale or Contribution of Assets between an Investor

and its Associates or Joint VentureDeferred

The Trust is in the process of assessing the impact of implementing these Standards, since the effects would only be observable for the future financial years.


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6. significant Accounting estimates and judgements

6.1 changes in estimates

Estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Directors of the Manager are of the opinion that there are no significant changes in estimates at the end of each reporting period.

6.2 critical judgements made in applying accounting policies

There are no judgements made by the Manager in the process of applying the accounting policies of the Trust that have a significant effect on the amounts recognised in the financial statements.

6.3 Key sources of estimation uncertainty

The following are key assumptions concerning the future and other key sources of estimation uncertainty at the end of each reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

(i) Fair value of investment properties

Fair value is determined in accordance with the Deed and the Securities Commission’s Guidelines on Real Estate Investment Trusts which require the investment properties to be valued by independent qualified valuers. In determining the fair value, the valuers used valuation techniques which involve certain estimates.

In relying on the valuation reports, the Manager has exercised its judgement and is satisfied that the valuation methods and estimates reflect the current market conditions. The basis of valuation is disclosed in Note 7(b) to the financial statements.

(ii) Impairment of receivables

The Trust makes impairment of receivables based on an assessment of the recoverability of receivables. Impairment is applied to receivables where events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Manager specifically analyses historical bad debts, customer concentration, customer creditworthiness, current economic trends and changes in customer payment terms when making a judgement to evaluate the adequacy of impairment of receivables. Where expectations differ from the original estimates, the differences would impact the carrying amount of receivables.

(iii) Fair values of borrowings

The fair values of borrowings are estimated by discounting future contractual cash flows at the current market interest rates available to the Trust for similar financial instruments. Sensitivity analysis of the effects of interest rate risk has been disclosed in Note 27 to the financial statements.

(iv) Fair value measurement

The financial and non-financial assets and liabilities that are measured subsequent to initial recognition at fair value are grouped into Level 1 to Level 3 based on the degree to which the fair value inputs are observable.(i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical

assetsorliabilities;(ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that

areobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices);and(iii) Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on

observable market data (unobservable inputs).

The classification of an item into the above levels is based on the lowest level of the inputs used in the fair value measurement of the item. Transfers of items between levels are recognised in the period they occur.



56

7. investment Properties

2015 2014 rM rM

As at 1 January 217,300,000 221,700,000Enhancement of an investment property 308,837 -Changes in fair value 4,291,163 4,500,000Reclassification to non-current asset held for sale - (8,900,000) As at 31 December 221,900,000 217,300,000 Investment properties comprised: Land and buildings 221,900,000 217,300,000

(a) Investment properties with an aggregate carrying amount of RM110,400,000 (2014: RM106,300,000) are charged to a financial institution for banking facilities granted to the Trust as disclosed in Note 12 to the financial statements.

(b) Fair value information

There were no transfers between Level 1, Level 2 and Level 3 fair value measurements during the financial years ended 31 December 2015 and 31 December 2014.

The fair values of investment properties of the Trust are categorised as Level 3. Level 3 fair values of freehold land and buildings were determined by external and independent property valuers, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued. The property valuers provide the fair value of the investment properties portfolios of the Trust annually. Changes in Level 3 fair value are assessed by the Manager annually after obtaining the valuation reports from the independent valuer.

The valuation techniques and significant unobservable inputs used in determining the fair value measurement of Level 3 financial instruments as well as the relationship between significant unobservable inputs and fair value, is detailed in the table below:

valuation technique used significant unobservable inputs

inter-relationship between significant unobservable inputs and fair value measurements

Investment method(refer below)

- Allowance for void of 5% to 15% The estimated fair value would increase/ (decrease) if:

- Term yield rate of 6.5% - Allowance for void was lower/(higher)- Reversionary yield rate of 6.75% - Term yield rate was higher/(lower)- Discount rate of 6.75% - Reversionary yield rate was higher/(lower)

- Discount rate was lower/(higher)

The investment method involved capitalisation of the net annual income stream that is expected to be received from the property after deducting the annual outgoings and other operating expenses incidental to the property with allowance for void by using an appropriate market derived capitalisation rate.

Direct operating expenses arising from investment properties generating rental income during the financial year are as disclosed in Note 16 to the financial statements.


Annual Report 2015

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Annual Report 2015

59

8. trade and other receivables

2015 2014 rM rM

Trade receivables 879,318 980,934 other receivables, deposits and prepayments Other receivables 491,422 31,970Deposits 548,820 368,820 1,040,242 400,790 Loans and receivables 1,919,560 1,381,724Prepayments 71,768 387,492 1,991,328 1,769,216

(a) Trade receivables are non-interest bearing and the normal trade credit terms granted by the Trust is 30 days (2014: 30 days). They are recognised at their original invoice amounts which represent their fair values on initial recognition.

(b) Trade and other receivables are denominated in Ringgit Malaysia (“RM”).

(c) The ageing analysis of trade receivables of the Trust are as follows:

2015 2014 rM rM

Neither past due nor impaired 394,626 120,213 Past due not impaired 31 to 60 days - 86,06161 to 90 days - 115,50091 to 120 days 7,500 -121 to 150 days - 155,691More than 151 days 477,192 503,469 484,692 860,721 879,318 980,934

(d) Trade receivables that are neither past due nor impaired as at the end of the reporting period represent existing customers, including related parties, with no defaults in the past.

(e) Receivables that are past due but not impaired

Based on past experience, the Manager believes that no impairment is necessary in respect of these balances. Trade receivables that are past due but not impaired related to receivables with good track record with the Trust and deposits as collateral.

(f) Information on financial risks of trade and other receivables is disclosed in Note 27 to the financial statements.



60

9. deposits with a licensed bank

The deposits are placed with a licensed bank at the weighted average interest rates of 3.15% (2014: 3.14%) per annum.

Information on financial risks of cash and bank balances is disclosed in Note 27 to the financial statements.

The deposits are denominated in Ringgit Malaysia (“RM”).

10. non-current Asset held for sale

2015 2014 rM rM

Land and building held for sale, carrying amount at cost: As at 1 January 8,900,000 - Disposal (8,900,000) -Reclassification from investment properties - 8,900,000 As at 31 December - 8,900,000

Land and building held for sale as at 31 December 2014 represented Atrium Rawang, which was charged to a financial institution for banking facilities granted to the Trust as disclosed in Note 12 to the financial statements.

The disposal of Atrium Rawang has been completed on 30 April 2015.

11. trade and other Payables

2015 2014 rM rM

non-current liabilities Tenants’ deposits 3,321,551 2,190,316 current liabilities Trade payables 44,736 222,964Other payables and accrued expenses 2,432,827 3,778,427Tenants’ deposits 125,000 1,634,411 2,602,563 5,635,802 5,924,114 7,826,118

(a) Trade payables are non-interest bearing and the normal trade credit terms granted to the Trust is 30 days (2014: 30 days).

(b) Included in other payables and accrued expenses are amounts owing to the Manager and the Trustee of RM121,935 (2014: RM111,314) and RM Nil (2014: RM9,044) respectively, which are unsecured, interest free and payable monthly in arrears.

(c) Trade and other payables are denominated in Ringgit Malaysia (“RM”).

(d) Information on financial risks of trade and other payables is disclosed in Note 27 to the financial statements.


Annual Report 2015

61

12. borrowings

2015 2014 rM rM

Short Term Financing Short Term Revolving Credit (“STRC”) 39,600,000 45,000,000 Long Term Financing Term Loan (“TL”) 20,000,000 20,000,000 59,600,000 65,000,000

(a) The STRC facility is secured by a first party legal charge over an investment property, Atrium Shah Alam 1 (2014: Atrium Shah Alam 1 and Atrium Rawang) as disclosed in Note 7 and Note 10 to the financial statements. This financing facility is renewable on a yearly basis and subject to the bank’s review.

The STRC facility bears interest ranging from 4.30% to 4.51% (2014: 4.10% to 4.35%) per annum during the financial year.

(b) The term loan bears interest rate at cost of funds plus 0.725% (2014: cost of funds plus 0.725%) per annum and is repayable in one lump sum in October 2018.

The term loan is secured by a first party legal charge over an investment property, Atrium USJ, as disclosed in Note 7 to the financial statements.

(c) Information on financial risks of borrowings and their remaining maturity are disclosed in Note 27 to the financial statements.

(d) All borrowings are denominated in Ringgit Malaysia (“RM”).

13. unitholders’ capital

2015 2014 number number of units rM of units rM

Authorised 121,801,000 121,801,000 121,801,000 121,801,000 Issued and Fully Paid 121,801,000 119,351,580 121,801,000 119,351,580



62

14. unitholdings of directors and related Parties

(a) As at the end of each reporting period, the Manager, Directors of the Manager and related parties who held units in Atrium REIT are as follows:

2015 Percentage of total Market number of units value unit held % rMdirect unitholdings in Atrium reit Atrium REIT Manager Sdn. Bhd. 750,800 0.62 825,880 directors of the Manager: Wong Sui Ee 363,000 0.30 399,300Tor Peng Sie 100,000 0.08 110,000How Hu Son 100,000 0.08 110,000Soong Kwong Heng 55,000 0.05 60,500 related parties of the Manager: Glory Blitz Industries Sdn. Bhd. 10,024,800 8.23 11,027,280Sparkle Skyline Sdn. Bhd. 4,258,900 3.50 4,684,790Chan Kam Tuck (i) 30,241,400 24.83 33,265,540Chan Kum Chong 70,000 0.06 77,000

2014 Percentage of total Market number of units value

unit held % rM

direct unitholdings in Atrium reit

Atrium REIT Manager Sdn. Bhd. 650,800 0.53 774,452 directors of the Manager: Wong Sui Ee 363,000 0.30 431,970Tor Peng Sie 100,000 0.08 119,000How Hu Son 100,000 0.08 119,000Soong Kwong Heng 55,000 0.05 65,450 related parties of the Manager: Glory Blitz Industries Sdn. Bhd. 10,024,800 8.23 11,929,512Sparkle Skyline Sdn. Bhd. 9,258,900 7.60 11,018,091Chan Kam Tuck (i) 25,186,400 20.68 29,971,816Chan Kum Chong 70,000 0.06 83,300

(i) Unitholdings under Chan Kam Tuck is made up of his individual holding of 10,241,400 (2014: 10,186,400) units and his deemed holding of 20,000,000 (2014: 15,000,000) units under a trust where he is a beneficiary.

(b) The market value is determined by using the closing market price of the Trust as at 31 December 2015 of RM1.10 (2014: RM1.19).


Annual Report 2015

63

15. gross revenue

Gross rental revenue represents rental income received from the rental of investment properties.

16. Property operating expenses

2015 2014 rM rM

Property management fees 185,393 224,532Assessment and quit rent 485,870 498,222Repair and maintenance 863,314 759,667Insurance 278,118 291,176Other operating expenses 121,167 92,755 1,933,862 1,866,352

17. Manager’s fees

Pursuant to the Deed, the Manager is entitled to receive a fee of up to a maximum of 1.0% per annum of the Net Asset Value of Atrium REIT. The Manager’s fee is payable in arrears, calculated and accrued daily. However, the Manager has only been charging its fees at the rate of 0.8% (2014: 0.8%) per annum of the Net Asset Value.

18. trustee’s fees

Pursuant to the Deed, the Trustee is entitled to receive a fee of up to a maximum of 0.4% per annum of the Net Asset Value of the Trust, subject to a minimum fee of RM40,000 per annum. The Trustee’s fee is payable in arrears, calculated and accrued daily. However, the Trustee has only been charging its fees at the rate of 0.065% (2014: 0.065%) per annum of the Net Asset Value.

19. finance costs

2015 2014 rM rM

Interest expense on: - short term revolving credit facility 1,781,352 1,903,295 - term loan 930,950 906,386 2,712,302 2,809,681

20. tax expense

2015 2014 rM rM

Income tax expense based on net income for the financial year - -Real property gains tax 157,577 - 157,577 -

The Malaysian income tax is calculated at the statutory tax rate of twenty-five percent (25%) (2014: 25%) of the estimated taxable income for the fiscal year.



64

20. tax expense (continued)

The numerical reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rate of the Trust is as follows:

2015 2014 rM rM

Net income before tax 15,582,244 14,822,606 Tax at Malaysian statutory tax rate of 25% (2014: 25%) 3,895,561 3,705,652 Tax effects in respect of: Non-deductible expenses 152,163 45,754Effect of changes in fair value of investment properties not subject to tax (1,072,791) (1,125,000)Different tax rates arising from gain from real property investments (630,310) -Effect of income exempted from tax (2,187,046) (2,626,406) Tax expense 157,577 -

Pursuant to Section 61A(1) of Income Tax Act, 1967 under the Finance Act, 2006, provided that 90% or more of the total income of the Trust is distributed to its unitholders in the basis period for a year of assessment, the total income of the Trust for that year of assessment shall be exempted from tax.

The Trust distributed approximately 90.3% (2014: 99.1%) of the realised and distributable income and thus, its total income for the year is exempted from tax.

21. eArnings Per unit (a) The earnings per unit before Manager’s fee of 13.78 sen (2014: 13.24 sen) is calculated by dividing the net income after tax but

before deduction of manager’s fees for the financial year of RM16,780,074 (2014: RM16,133,420) and by the number of units in circulation during the financial year of 121,801,000 (2014: 121,801,000).

(b) The earnings per unit after Manager’s fee of 12.66 sen (2014: 12.17 sen) has been calculated based on net income after tax of RM15,424,667 (2014: RM14,822,606) for the financial year and on the number of units in circulation during the financial year of 121,801,000 (2014: 121,801,000).


Annual Report 2015

65

22. net incoMe distributions

Distributions to unitholders are from the following sources:

2015 2014 rM rM

Net rental income 10,933,354 14,286,257Interest income 556,197 425,966Gain on disposal of an investment property 4,258,126 -Other income 1,057,289 58,800 16,804,966 14,771,023Less: Expenses (5,513,885) (4,448,417) 11,291,081 10,322,606Less: Income distributed (8,465,170) (8,038,866)Less: Proposed final income distribution (1,583,413) (2,192,418) Balance undistributed income 1,242,498 91,322

23. Portfolio turnover ratio

2015 2014

Portfolio Turnover Ratio (“PTR”) (times) 0.05 -

PTR is the ratio of the average of total acquisitions and total disposals of investments in Atrium REIT for the financial year ended 31 December 2015 to the average net asset value of the Trust for the financial year calculated on a daily basis.

Since the basis of calculating PTR may vary among real estate investment trusts, comparison of PTR of Atrium REIT with other real estate investment trusts may not be an accurate comparison.

24. Management expense ratio

2015 2014

Management expense ratio (“MER”)(%) 1.64 0.99

MER is calculated based on total fees of Atrium REIT incurred, including the Manager’s fees, Trustee’s fees, audit fees, tax agent’s fees, administrative and other expenses, to the average net asset value of the Trust for the financial year calculated on a daily basis.

Since the basis of calculating MER may vary among real estate investment trusts, comparison of MER of Atrium REIT with other real estate investment trusts may not be an accurate comparison.

25. transaction With broker/dealers

There was no transaction made with brokers/dealers during the financial year.



66

26. financial instruments

(a) Capital management

The primary objective of the Manager is to ensure that the Trust would be able to continue as a going concern while maximising the returns to unitholders through a balance of issuance of new units and loan financing. The overall strategy of the Manager remains unchanged from that in the previous financial year.

The Manager manages the capital structure of the Trust and makes adjustments to it in response to changes in economic conditions. In order to maintain or adjust the capital structure, the Manager may adjust the income distribution to unitholders or issue new units. No changes were made in the objectives, policies or processes during the financial years ended 31 December 2015 and 31 December 2014.

The Manager would also comply with the provisions of the Deed and all applicable rules and guidelines prescribed by the Securities Commission relating to the financing of the Trust.

The Manager monitors capital using a gearing ratio, which is total borrowings divided by total assets of the Trust pursuant to Securities Commission’s Guidelines on Real Estate Investment Trusts.

2015 2014 rM rM

Total borrowings 59,600,000 65,000,000 Total assets 238,796,436 241,331,361 Gearing ratio 24.96% 26.93%

(b) Financial instruments

loans and 31 december 2015 receivables rM

financial assets Trade and other receivables, net of prepayments 1,919,560Cash and cash equivalents 14,792,685 16,712,245

other financial liabilities rM

financial liabilities Borrowings 59,600,000Trade and other payables 5,924,114 65,524,114


Annual Report 2015

67

26. financial instruments (continued)

(b) Financial instruments (continued)

loans and 31 december 2014 receivables rM

financial assets Trade and other receivables, net of prepayments 1,381,724Cash and cash equivalents 13,362,145 14,743,869

other financial liabilities rM

financial liabilities Borrowings 65,000,000Trade and other payables 7,826,118 72,826,118

(c) Methods and assumptions used to estimate fair value

The fair value of financial assets and financial liabilities are determined as follows:

(i) Financial instruments that are not carried at fair value and whose carrying amounts are a reasonable approximation of fair value

The carrying amounts of financial assets and liabilities, such as trade and other receivables, trade and other payables under current assets and current liabilities, are reasonable approximation of fair value, due to their short-term nature.

(ii) Borrowings

The fair value of bank borrowings are estimated by discounting expected future cash flows at market related rate for similar instruments at the end of each reporting period.

(d) Fair value hierarchy

Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 fair value measurements are those derived from inputs for the asset or liability that are not based on observable market data (unobservable inputs).



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Annual Report 2015

69

27. financial risks Management objective and Policies

The financial risk management objective of the Trust is to optimise value creation for unitholders whilst minimising the potential adverse impact arising from fluctuations in interest rates and the unpredictability of the financial markets.

The Trust has informal risk management policies and clearly defined guidelines which set out its overall business strategies and general risk management philosophy. The Trust is exposed mainly to credit risk, liquidity and cash flow risk and interest rate risk, which arises in the normal course of the Trust’s business. Information on the Trust of the related exposures is detailed below:

(i) Credit risk

The Trust is exposed to credit risk mainly from receivables. The Trust extends credit to its tenants based upon established credit evaluation and credit control and monitoring guidelines.

The Trust has no major concentration of credit risk as at end of each reporting period. The Trust does not anticipate the carrying amount of the receivable at the end of each reporting period to be significantly different from the values that would eventually be received as the Trust has the right to deduct from the security deposits in the event of default in payment.

The Trust seeks to invest cash assets safely and profitably with placement of such assets with creditworthy licensed banks and financial institutions. In respect of deposits placed in financial institutions in Malaysia, the Directors of the Manager believe that the possibility of non-performance by these financial institutions is remote on the basis of their financial strength.

Exposure to credit risk

At the end of each reporting period, the maximum exposure of the Trust to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position.

(ii) Liquidity and cash flow risk

The Manager monitors and maintains a level of cash and cash equivalents and bank facilities deemed adequate to finance the Trust’s operations and to mitigate the effects of fluctuations in cash flows. In addition, the Manager also monitors and observes the Securities Commission Guidelines on Real Estate Investment Trusts concerning limits on total borrowings.

At the end of the reporting period, RM39.6 million (2014: RM45.0 million) of the Trust’s borrowings comprising Short Term Revolving Credit (“STRC”) would be maturing in the next twelve months based on the carrying amount reflected in the financial statements. There would be no roll over risk for the STRC since the Trust is not in breach of any covenants that would trigger an event of default which would affect the bank’s assessment to renew the facilities. There was no history of non-renewal of the STRC with the latest renewal by the Bank on 7 July 2015.

The table below summarises the maturity profile of the Trust’s liabilities at the end of each reporting period based on contractual undiscounted repayment obligations.

on demand or within one to over 2015 one year five years five years total rM rM rM rM

financial liabilities Trade and other payables 2,477,563 - - 2,477,563Tenants’ deposit 125,000 702,969 2,618,582 3,446,551Borrowings 42,260,520 21,705,000 - 63,965,520 Total undiscounted financial liabilities 44,863,083 22,407,969 2,618,582 69,889,634



70

27. financial risks Management objective and Policies (continued)

(ii) Liquidity and cash flow risk (continued)

on demand or within one to over 2014 one year five years five years total rM rM rM rM

financial liabilities Trade and other payables 4,001,391 - - 4,001,391Tenants’ deposit 1,634,411 2,190,316 - 3,824,727Borrowings 46,903,500 23,244,932 - 70,148,432 Total undiscounted financial liabilities 52,539,302 25,435,248 - 77,974,550

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Trust’s financial instruments would fluctuate because of changes in market interest rates.

The Trust’s exposure to fluctuation in interest rate risk arises primarily from its interest-earning financial assets and interest-bearing financial liabilities. Interest rate risk is managed by the Manager on an ongoing basis with the primary objective of limiting the extent to which net interest expense could be affected by adverse movements in interest rates. On the other hand, the management has considered the impact arising from interest income as not significant.

In respect of interest-earning financial assets and interest-bearing financial liabilities, the following tables sets out the carrying amounts, the weighted average effective interest rates as at the end of each reporting period and the remaining maturities of the Trust’s financial instruments that are exposed to interest rate risk:

Weighted average effective Within one to interest one year five years total2015 note (per annum) rM rM rMfloating rates Deposits with a licensed bank 9 3.15 14,649,240 - 14,649,240Term loan 12 4.65 - 20,000,000 20,000,000Short Term Revolving Credit 12 4.37 39,600,000 - 39,600,000

Weighted average effective Within one to interest one year five years total2014 note (per annum) rM rM rMfloating ratesDeposits with a licensed bank 9 3.14 13,094,807 - 13,094,807Term loan 12 4.67 - 20,000,000 20,000,000Short Term Revolving Credit 12 4.31 45,000,000 - 45,000,000


Annual Report 2015

71

27. financial risks Management objective and Policies (continued)

(iii) Interest rate risk (continued)

Sensitivity analysis for interest rate risk

As at 31 December 2015, if interest rates at the date had been 10 basis points lower or higher with all other variables held constant, post-tax net income for the financial year would have been RM48,428 (2014: RM52,185) higher or lower, arising mainly as a result of lower or higher interest expense on variable borrowings and interest income from deposits. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

28. oPerAting segMent

As the principal activity of Atrium REIT is to invest in properties, which all are located in Malaysia with the primary objective to derive rental income, there are no risk and returns distinguishable between business and geographical segments. No operating segment is thus presented.

The Directors of the Manager assesses the performance of the operating segments based on various factors, including but not limited to, a measure of profit or loss before tax.

The following are major customers with revenue equal or more than ten percent (10%) of the Trust’s revenue:

2015 2014 rM rM

Customer A 3,725,309 4,967,078 Customer B 3,666,015 - Customer C 2,006,021 5,349,390

29. coMMitMents

(a) Operating lease commitments Atrium reit as lessor

Atrium REIT leases out its investment properties under operating leases. The aggregate future minimum lease receivables under non-cancellable lease arrangements as at the end of each reporting period are as follows:

2015 2014 rM rM

Not later than one (1) year 9,358,020 13,241,694Later than one (1) year and not later than five (5) years 26,987,884 17,041,079Later than five (5) years 2,618,583 - 38,964,487 30,282,773



72

29. coMMitMents (continued)

(b) Capital commitments

2015 2014 rM rM

Capital expenditure in respect of addition of investment properties: Approved and contracted for 17,214,872 -Approved but not contracted for 867,012 -

18,081,884 -

30. significant event subsequent to the financial year

On 8 January 2016, Atrium REIT has proposed to undertake an Asset Enhancement Initiative (“AEI”) on the property located at Lot 7A, Persiaran Jubli Perak, Seksyen 22, 40300 Shah Alam, Selangor Darul Ehsan, known as Atrium Shah Alam 2 (“the Property”).

The AEI mainly involves the upgrading and refurbishment of the whole warehouse floor slab, the whole warehouse roof, replacement of the lighting system for the whole warehouse, replacement of the rain water goods, external wall and facade repainting and sheet piling works at the rear boundary of the Property. The sheet piling works are necessary to prevent the soil/earth beneath the warehouse floor slab to be drawn out gradually causing the said floor slab to undulate and the rear driveway to settle. The total contract sum for the AEI is approximately RM15.4 million, excluding Goods and Services Tax.

The AEI is targeted to commence in January 2016 and to be completed by October 2016 in phases. The cost of the AEI will be financed via bank borrowings and internal funds.


Annual Report 2015

73Notes to the Financial Statements

31. supplementary information on realised and unrealised undistributed income

The undistributed income as at the end of each reporting period may be analysed as follows:

2015 2014 rM rM

Total Undistributed Income Of The Trust - Realised 2,129,579 2,753,663- Unrealised 51,791,163 46,400,000 53,920,742 49,153,663

The unrealised income relates to the cumulative net change arising from the fair value adjustments to the investment properties.

The supplementary information on realised and unrealised undistributed income has been prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (‘MIA Guidance’) and the directive of Bursa Malaysia Securities Berhad.


74

siZe of holdings no. of unitholders no. of units %

1 - 99 15 405 0.00100 - 1,000 487 386,141 0.321,001 - 10,000 1,254 6,742,700 5.5410,001 - 100,000 690 23,258,100 19.09100,001 to less than 5% of issued units 121 52,313,654 42.955% and above of issued units 3 39,100,000 32.10

totAl : 2,570 121,801,000 100.00

thirty (30) lArgest unitholders As At 31 deceMber 2015

name no. of units %

1) CIMB GROUP NOMINEES (TEMPATAN) SDN BHDEXEMPT AN FOR CIMB COMMERCE TRUSTEE BERHAD (BTR2031)

20,000,000 16.42

2) CHAN KAM TUCK 10,000,000 8.21

3) PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR GLORY BLITZ INDUSTRIES SDN BHD (TCS)

9,100,000 7.47

4) SOH KAM ENG 5,426,000 4.45

5) SPARKLE SKYLINE SDN BHD 3,258,900 2.68

6) SENTINEL PORTFOLIO SDN. BHD 3,000,000 2.46

7) STEPHEN EDWARD BLACKBURN 2,068,200 1.70

8) CITIGROUP NOMINEES (TEMPATAN) SDN BHDMCIS INSURANCE BERHAD (LIFE PAR FD)

1,521,000 1.25

9) CITIGROUP NOMINEES (TEMPATAN) SDN BHDMCIS INSURANCE BERHAD (SHH FD)

1,443,900 1.19

10) CHRISTINA CHONG YOKE LENG 1,231,000 1.01

11) HLIB NOMINEES (ASING) SDN BHDKWOK CHIU NAM (CCTS)

1,000,000 0.82

12) HLIB NOMINEES (ASING) SDN BHDCHEUNG SIU WA (CCTS)

1,000,000 0.82

13) MAYBANK SECURITIES NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR SPARKLE SKYLINE SDN BHD (DLR 060-MARGIN)

1,000,000 0.82

14) WIBANAS SDN BHD 979,200 0.80

15) BEVERLY TOWER DEVELOPMENT SDN BHD 940,000 0.77

16) CITIGROUP NOMINEES (TEMPATAN) SDN BHDMCIS INSURANCE BERHAD (ANN FD)

933,200 0.77

17) DETIK LEGASI SDN. BHD 879,200 0.72

18) LIAN MONG YEE @ LIAN MUNG YEE 863,600 0.71

19) GLORY BLITZ INDUSTRIES SDN BHD 841,800 0.69

20) CHAI KOOI IM 826,000 0.68

21) ATRIUM REIT MANAGERS SDN BHD 750,800 0.62

Analysis of Unitholdings as at 31 December 2015

Annual Report 2015

75

name no. of units %

22) LEONG AH MENG @ LEONG MEE 680,000 0.56

23) ON THIAM CHAI 662,000 0.54

24) TEW PENG HWEE @ TEOH PENG HWEE 519,800 0.43

25) HLB NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR RAMPAI DEDIKASI SDN BHD

500,000 0.41

26) CHOY YOKE CHUN 490,000 0.40

27) MAYBANK NOMINEES (TEMPATAN) SDN BHDCHAU MEI LAN

460,000 0.38

28) GUAN BOON KUAN 430,000 0.35

29) PUBLIC NOMINEES (TEMPATAN) SDN BHDPLEDGED SECURITIES ACCOUNT FOR LAW HOCK HUA (E-SS2)

418,100 0.34

30) LAW HOCK HUA 400,000 0.33

71,622,700 58.80

list of substAntiAl unitholders (5% And Above)

name no. of units %

1) CHAN KAM TUCK (Note 1) 30,241,400 24.83

2) GLORY BLITZ INDUSTRIES SDN BHD 10,024,800 8.23

40,266,200 33.06

Note 1- Unitholding under Chan Kam Tuck is made up of his individual holding of 10,241,400 units and his deemed holding under a trust where he is the beneficiary.

Analysis of Unitholdings as at 31 December 2015 (cont’d)

ATRIUM REAL ESTATE INVESTMENT TRUST(Established in Malaysia)

(Managed by Atrium REIT Managers Sdn. Bhd. (710526-A))AtriuM reAl estAte investMent trust(Established in Malaysia)

(Managed by Atrium REIT Managers Sdn. Bhd. (710526-V))

AtriuM REAL ESTATE INVESTMENT TRUST

76

notice of the fourth AnnuAl generAl Meeting

NOTICE IS HEREBY GIVEN that the Fourth Annual General Meeting (“AGM”) of Atrium Real Estate Investment Trust (“Atrium REIT”) will be held at Oasis Hall, Ground Floor, Flamingo Hotel, 5, Tasik Ampang, Jalan Hulu Kelang, 68000 Ampang, Selangor Darul Ehsan on Thursday, 28 April 2016 at 10.00 a.m. for the following purpose:-

ORDINARY BUSINESS

To receive the Audited Financial Statements of Atrium REIT for the financial year ended 31 December 2015 together with the Trustee’s Report issued by CIMB Commerce Trustee Berhad, as Trustee of Atrium REIT and the Manager’s Report issued by Atrium REIT Managers Sdn. Bhd., as the Manager of Atrium REIT and the Auditors’ Report thereon.

(See Note 2)

by order of the boardAtriuM reit MAnAgers sdn. bhd. (710526-v)(as the Manager of Atrium real estate investment trust)

liM Poh yen (MAicsA 7009745)Wong WAi foong (MAicsA 7001358)Company Secretaries


notes:-

1. APPointMent of ProXy

(i) A unitholder is entitled to attend and vote at any meeting and is entitled to appoint another person (whether a unitholder or not) as his proxy to attend and vote.

If a unitholder appoints 2 proxies, the appointment will be invalid unless the unitholder specifies the proportions of his holdings to be represented by each proxy.

(ii) If the unitholder is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991, it may appoint at least one proxy in respect of each securities account it holds with units standing to the credit of the securities account.

(iii) A proxy has the same rights as the unitholder to vote whether on a poll or a show of hands, to speak and to be reckoned in a quorum.

(iv) The instrument appointing a proxy shall be in writing under the hand of the appointer or his/her attorney duly authorised in writing or if the appointer is a corporation/company, either under its common seal or under the hand of officer or attorney duly authorised.

(v) The instrument appointing a proxy must be deposited at the office address of the Manager at No. 36-2, Jalan 5/101C, Off Jalan Kaskas, Jalan Cheras, 56100 Kuala Lumpur not less than forty-eight (48) hours before the time set for the meeting or any adjournment thereof.

(vi) Only unitholders whose names appear in the Record of Depositors as at 21 April 2016 will be entitled to attend and vote at the meeting or appoint proxy (proxies) to attend and vote on their behalf.

2. Audited finAnciAl stAteMents for the finAnciAl yeAr ended 31 deceMber 2015

The Audited Financial Statements is meant for discussion only as the approval of the unitholders is not required pursuant to the provision under the Guidelines on Real Estate Investment Trust issued by the Securities Commission Malaysia. Hence, this Agenda is not put forward for voting by the unitholders of Atrium REIT.

ATRIUM REAL ESTATE INVESTMENT TRUST(Established in Malaysia)

(Managed by Atrium REIT Managers Sdn. Bhd. (710526-A))

FORM OF PROXY

ContactNo.(Duringofficehour)_______________________________

I/We……………………………………………………………….(nameofunitholderasperNRIC/CompanyRegistrationForm, incapital

letters)NRICNo./IDNo./CompanyNo...……………………………………(new)…………………………………………(old)of.…………

…………………………………………………………..……………………………………………………………………………………

……………………………..…………(Fulladdress)beingaunitholder/unitholdersofAtriuM reAl estAte investMent trust(“Atrium

REIT”)herebyappoint*……………….………………………………......................................(nameofproxyasperNRIC,incapitalletters)

NRICNo...……………………………………(new)…………………………………………(old)orfailinghim/her………………….……

…………………………......................................(nameofproxyasperNRIC,incapitalletters)NRICNo...……………………………………

(new)…………………………………………(old) or failing him/her theChairmanof theMeeting asmy/our proxy/proxies to attend for

me/usonmy/ourbehalfattheFourthAnnualGeneralMeetingofAtriumREITtobeheldatOasis Hall, Ground Floor,FlamingoHotel,5,Tasik

Ampang,JalanHuluKelang,68000Ampang,SelangorDarulEhsanonThursday,28April2016at10.00a.m.andatanyadjournmentthereoffor

consideringthebusinesstobetransactedattheMeeting.

Datedthis............dayof............................................2016

….....………………..................................SignatureofUnitholder/CommonSeal

NOTES :

1. Aunitholderisentitledtoattendandvoteatanymeetingandisentitledtoappointanotherperson(whetheraunitholderornot)ashisproxytoattendandvote.

Ifaunitholderappoints2proxies,theappointmentwillbeinvalidunlesstheunitholderspecifiestheproportionsofhisholdingstoberepresentedbyeachproxy.

2. IftheunitholderisanauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991,itmayappointatleastoneproxyinrespectofeachsecuritiesaccountitholdswithunitsstandingtothecreditofthesecuritiesaccount.

3. Aproxyhasthesamerightsastheunitholdertovotewhetheronapollorashowofhands,tospeakandtobereckonedinaquorum.

4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointerorhis/herattorneydulyauthorisedinwritingoriftheappointerisacorporation/company,eitherunderitscommonsealorunderthehandofofficerorattorneydulyauthorised.

5. TheinstrumentappointingaproxymustbedepositedattheofficeaddressoftheManageratNo.36-2,Jalan5/101C,OffJalanKaskas,JalanCheras,56100KualaLumpurnotlessthanforty-eight(48)hoursbeforethetimesetforthemeetingoranyadjournmentthereof.

6. OnlyunitholderswhosenamesappearintheRecordofDepositorsasat21April2016willbeentitledtoattendandvoteatthemeetingorappointproxy(proxies)toattendandvoteontheirbehalf.

For appointment of two proxies, percentage ofunitholdingstoberepresentedbytheproxies:-Proxy no. of units Percentage (%)1 2 total 100

No.ofunitsheld CDSAccountNo.

Foldhere-------------------------------------------------------------------------------------------------------------------------------------------------------------------------

TheManagerof ATRIUMREALESTATEINVESTMENTTRUST No.36-2,Jalan5/101C OffJalanKaskas,JalanCheras 56100KualaLumpur

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------Foldhere

STAMP

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